Some
advisors are reluctant to update trust deeds of their SMSF clients, due to
additional work for them and extra cost for trustees. We recommend them to read ATO
document Nat 71128 06.2007
Some quotes from this
document:
1. You are responsible for ensuring your fund is properly managed
and complies with all governing rules (including the trust deed and super
laws). these rules apply to you in your capacity as a trustee of the fund.
2. you use a professional to do certain
tasks on your behalf (for example, an accountant, lawyer, investment advisor,
super fund administrator or tax agent). all trustees are responsible and
accountable for running the fund and making decisions.
3. If you use a professional to help you manage your fund, it's
important you get good advice and choose one that's right for you and your
circumstances. It's essential to make sure any financial, investment and legal
advice you receive comes from a qualified professional. Good advice is
important as your decisions will have an impact on the retirement income of the
fund's members, including you.
4. You must also ensure the fund's trust deed and investment
strategy are regularly reviewed and updated in accordance with the law and the
needs of the members.
5. To avoid penalties, make sure you understand and comply with
your duties and responsibilities under the super laws.
Most
advisors agree that SMSF trust deed should be updated for all retiring members
who want to commence the new account based pensions.
However,
most advisors are not sure if their client's SMSF trust deed should be updated
if members are in accumulation phase. Below we give an example, where it is
clear that SMSF trust deed must be updated even if all members are in accumulation
phase.
Example
Most
SMSF have husband and wife as members and in most cases, there is an age
difference between them, in our example we will assume that there is 5 years
difference between the two spouses.
Under
division 6.7 of the SIS Regulations, 85% of concessional (deductible) contributions
after 1st July 2006 of younger spouse can be split with older spouse,
if some other conditions are also met.
These
requests (mostly) for the first time can be made on 1st July 2006,
i.e. in the next fund year. As an advisor, please read (3) above, it clearly says
"that good advice is important as your decisions will have an impact on the
retirement income".
In
our example if the older spouse receives 85% on concessional (deductible)
contributions on 1st July 2006, the older member may also
receive more allocation of income for 2006 07 year of the fund based on daily
balance method of allcation of income to the fund members. This means, that the closing balance of this older
member as on 30th June 2007 will also be higher.
In future, 85% of younger spouse new contributions plus 100% of own
contributions plus most of the income of the fund allocated to older
spouse will result in overall less tax to be paid by the family or in other words, older spouse will retire, at age 60, with more money
in the member account and can access this money, tax free 5 years earlier then
the younger spouse.
Needless
to add, advisor can charge a fee to their clients for implementing
this strategy and achieve a better result for their clients and give a true
meaning to "Good Advice".
However,
if you read (4) above, this "need" of more tax fee income for the members can
only be implemented if the SMSF trust deed is updated.
An
extreme situation could be that the member sues the advisor for not giving
"Good Advice". (we should avoid this topic and line of thinking! )
Our
Trust Deed
For
advisors, you should update your client's SMSF trust deed with the one you can read
and understand. Our trust deed is written in plain English and gives clues and
prompts advisor to many strategies (just like the above), which an advisor can
implement for their clients.
We
are talking about a win-win situation, where the advisor charges a fee for his
service and client (trustees) willingly pays with "note of thanks" due to
manyfold benefit to him!
Before
you decide to update all your clients trust deeds, request for our offer for
one free SMSF update (if purchasing 10 or more updates) and for our special price for bulk
orders. With the first free SMSF update of trust deed, you can compare the
quality of our trust deed with your current supplier.
Auditing all SMSF will be much easier as all your clients will have one trust deed. Deeds can be downloaded from our website 24 / 7 from our unique document manager.
The question is, why is our such good quality trust deed selling for only $110 ! The reason is simple - with our 20 minute online system to build a trust deed, we can deliver all the cost savings to you and to your clients. And with our secure download facility reach thousands of trustees and their advisors. There is no reason for us to charge more !!
You can keep the trust deed up to date for the next five years for only $165.Our
trust deed has been prepared with input from accountants who have over two
decades of experience in setting up structures for their clients and have combined
knowledge of auditing and lodging tax returns for more then 2000 SMSF's,
their practical experience is an invaluable contribution.
For
further questions on our trust deed, please ring 02 9638 2807 or email sales@trustdeed.com.au
