The partner of a legal firm has warned against automatically relying upon documentation generated by an administration software package as a proper record for income allocation among members of an SMSF.
Cooper Grace Ward partner Scott Hay-Bartlem confirmed the yearly income allocation to SMSF members is normally noted with a trustee resolution and recognised documents administration software providers produce for this purpose are often very good.
However, Hay-Bartlem suggested trustees must always assess whether these generic documents are appropriate for the specific arrangements made within their fund.
“[So] does the [resolution] you’ve got actually achieve what you want it to [because] sometimes we need to do something different for some reason?” he told attendees of the SMSF Association Technical Summit 2026 held in Sydney recently.
He illustrated this point will a real-life client experience.
“I [was servicing] an SMSF with four siblings [where] three of them ran the business and one was the problem child. They said we want to buy business real property in the SMSF, had very good reasons for doing so, [but] the problem child said no to be difficult and they did [so] anyway,” he said.
“[What they did though] was quarantine the asset, segregated the asset, for income allocation purposes. So they got the [income] benefit [from the property and] he got the benefit from the other investments.
“Does that work? It does, but every year [in this situation] you have to change your trustee resolution to say the income from that business real property goes to those three members and the [income from] the other assets go to the other member.
“[Unfortunately], that’s not what they did because they used the resolution the software gave them.”
He emphasised this approach will not be applicable for all SMSFs, but in the above instance the trustees needed to consider and implement a tailored resolution, given the income allocation to members was so unique.
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
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