The ability to use digital signatures to execute or approve certain SMSF documents continues to lack clarity with only a few items with definitive status, a specialist auditor has said.
ASF Audits head of education Shelley Banton identified the trust deed as a document with a confusing approval situation.
Trust deeds were permitted to be signed electronically as a temporary practical measure during the height of the COVID-19 lockdown period and the Corporations Act was subsequently amended to make this practice permanent, Banton said.
However, this has not necessarily meant trustees can use digital signatures to complete the whole approval process of an SMSF trust deed, she noted.
“So yes, an establishment deed can be signed electronically. But the witnessing requirements [for this document] are set down state by state, which means that while the deed may be signed electronically, it may not be able to be fully executed by electronic signature if the state or territory requires a wet signature to witness it,” she revealed.
She pointed out the rules have been made more complicated with their application toward an amendment to the fund deed.
“If there is a trust deed upgrade or a change to the constitution [pertaining to a corporate trustee], then that’s allowed under section 127(1) of the Corporations Act, which means the document can be signed either electronically or by wet signature because it doesn’t need to be witnessed,” she confirmed.
Despite the change to the Corporations Act to accommodate the approval of documents digitally, she warned there are some SMSF items that still categorically require wet signatures.
“The consent to act as a trustee, whether it’s an individual trustee or the director of a corporate trustee, is exempted under SIS (Superannuation Industry (Supervision)) [rules] so it requires a wet signature [for an individual trustee] as does [the consent to act as a director of a corporate trustee under] section 201d of the Corporations Act,” she noted.
“Similarly you’ve got section 104A [of the SIS Act], which [deals with] signing the ATO trustee declaration, and it can be signed electronically at this point in time.”
She warned if either the consent to act as a trustee or the ATO trustee declaration have been executed using a digital signature, they will not have been executed correctly, which could in turn create a litigation risk should the fund face legal action.
