Compliance, SMSF

Disqualification crime has no limit

SMSF trustee criminal offence disqualified person

An offence committed by an individual that disqualifies them from being an SMSF trustee will be held against them forever.

An industry specialist has reminded advisers there is no statute of limitations on criminal offences an individual might have committed that would make them a disqualified person, preventing them from being an SMSF trustee, and has suggested practitioners should include procedures to mitigate their risk pertaining to this issue.

“[A person] will be disqualified if they’ve ever been convicted of an offence involving theft, fraud, bribery, embezzlement or tax evasion among others, and that is at any time in the past. There is no statute of limitations on criminal convictions. It is there forever and that is either in Australia or overseas,” Colonial First State head of technical Craig Day told delegates at the SMSF Association National Conference 2024 held in Brisbane recently.

“So if a person got done for shoplifting or car theft in Sweden in 1962, they’re disqualified, they cannot be a trustee of a self-managed super fund.”

According to Day, the broad nature of the rules means there is a good chance some people are currently SMSF trustees who are actually ineligible to hold such a position.

He acknowledged this fact puts advisers in a difficult position when setting up an SMSF for a client and emphasised they should put in place some risk mitigation procedures to protect themselves.

“When you’re recommending the establishment of a self-managed super fund for a client, when do you actually ask if they’ve got a criminal record and what was that for. Do you actually ask that question? I know I wouldn’t want to ask it, not at least directly,” he said.

“But your client will need to sign a trustee declaration confirming, among other things, that they are not a disqualified person.

“So what I would be doing, if I was an adviser, I would be running through that declaration and explaining all the different things that this person is now declaring. And I would explain what a disqualified person means and ask, at the end of that, if there is any reason that they can’t sign.

“I would then file note that conversation and say we had the conversation and the client understood what a disqualified person means and made no indication to me they would have failed that [test].”

He pointed out practising this type of discipline is necessary because if the fund runs into trouble, questions will be asked as to whether the person in question should have been allowed to be an SMSF trustee in the first place.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital