New SMSF deed

Acis, current as of: 21 June 2018.

The governing rules of our SMSF deed been updated. To summarise, those changes are:
1. Members who have reached retirement age can now make a once only contribution of up to $300,000 where the contributed funds arise from the sale of a principal place of residence held by the member for at least 10 years. Called a “downsizer contribution”, the governing rules now contain the express ability to make these contributions.
2. Since the removal of the “accountant’s exemption”, SMSF establishment, contributions and benefit payments now fall into the category of financial advice. This means that matters relating to making certain contributions and their treatment by the trustee and the commencement or commutation of pensions may require a Statement Of Advice (SOA) to be given to the member involved. New rules require the trustee to commence or commute pensions in certain circumstances. Because the rules require the trustee to act in a specific way, the trustee need simply to act according to the deed and no SOA is required for an adviser to advise the trustee to do so. The relevant member can direct the trustee not to commence or commute a pension. By way of example:
 
  • New rules require the trustee of a fund to commute one or more pensions (if more than one pension is being paid to a member, the trustee can decide which ones) to the extent necessary to reduce the member’s retirement phase benefits down to the transfer balance cap. The trustee is obliged to do this under the rules.
  • Under the new rules, where one or both members’ balances exceed the transfer balance cap, one member passes away and the benefit is to be paid as either a reversionary pension or death benefits pension to the survivor, it is important that correct balance is commuted to reduce the benefit down below the transfer balance cap. The correct balance to commute is the one belonging to the surviving member. If the deceased member’s balance is accidentally commuted (in whole or in part), then that amount will need to be paid out of the fund as a lump sum death benefit. Once again, this is an area where a SOA may be required, except that new rules require that the trustee commute the surviving member’s benefits – not the deceased spouse’s benefits.
  • Under our new rules, where a member is receiving an existing pension and a non-concessional contribution is made or a benefit is rolled in, the trustee is required to commence a new pension on the same terms as the existing pension, from the day the contribution is made.
Feel free to get in touch with our team if you have any queries.
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