Over the past two months at Abbott & Mourly Lawyers we have had numerous accountants seeking our advice on what to do with requests by SMSF auditors for membership applications – some from twenty years ago. The SMSF auditors have threatened a notification to the Commissioner of Taxation if they could not be found, which would result in a $4,200 fine.
Where does this come from? It is clear that the auditors are checking the governing rules of the Fund for audit purposes which are defined at section 10(1) of the SIS Act 93 as:
“governing rules, in relation to a fund, scheme or trust, means:
a) any rules contained in a trust instrument, other document or legislation, or combination of them; or
b) any unwritten rules;
governing the establishment or operation of the fund, scheme or trust.”
This includes the deed, pension documents, contribution documents, investment strategies and if the Fund uses them, membership applications. These rules are crucial as they have the force of law under section 54C of SIS Act 93, which states:
54C Other covenants must not be contravened
1. A person must not contravene any other covenant contained, or taken to be contained, in the governing rules of a superannuation entity.
By person that includes the administrator, adviser and auditor to the Fund. So if the auditor does not check them they are in the firing line. So if you don’t have membership applications what should you do?
First and foremost, at Abbott & Mourly Lawyers (AM), whose deeds are used exclusively by LightYear Docs, we do not have membership applications at all BECAUSE documents get lost!!! Our methodology is the following:
a) On establishment the members of the Fund become Initial Members and parties to the actual Deed (which includes a Product Disclosure Statement)binds the Members to the Deed and governing rules. It is stronger, safer and far more secure and with recent audit activity a lot smarter with no chance of a $4,200 fine. Enough said!
Now if you can’t find a client’s membership applications then AM can provide legal deeds of ratification for lost member applications plus a deed upgrade to our latest June 2022 deed which includes all SMSF legal changes to come in from 1 July 2022 in terms of contributions and deductions for $495. And for Trustee companies, at the same time, you can get those upgraded to our special purpose SMSF corporate trustee which has a number of estate planning securities built into the constitution for an additional $200. That is great value compared to the $4,200 fine per trustee for each breach of a SMSF member application. And you may not be aware that section 55(3) of the SIS Act 93 enables recovery from the accountant to the Fund if they are the party that have lost the application. For Strategist members of LightYear Docs the Lost Member application package of Deed of ratification for all members, deed and corporate trustee upgrade is only $595 rather than $695.
Going forward make sure your deed is obtained from AM or LightYear Docs and if you are caught or cannot find a membership application then go to your mobile phone’s app download centre and download the Abbott Mourly app, sign up for free and then you can make a formal request for our Lost SMSF Member application package. The Abbott Mourly app is the best way to contact us rather than email as it goes directly into our daily case meetings for review and discussion. No more lost emails only full legal support.
P.S. Launch of the I Love SMSF Strategy Course: On 9 – 11 May 2022 I am doing my first three day SMSF strategy course for more than three years. If you want to be the best you can be in terms of SMSF strategy advising and meet ALL the competency standards for providing advice as an unlicensed accountant or licensed adviser, this is the course for you. Take your SMSF strategy knowledge to a nine out of ten and really make a difference to your clients SMSFs. To find out more go to: SMSF Strategy Course and contact Talitha for a special offer – email@example.com if you have done the SAPEPAA course or you are a Strategist.