Share
The Importance of a Declaration of Trust in SMSF Compliance
 
 
   

SMSF Asset Separation: A Legal Must, Not a Maybe!

News | Navjot Kaur | Released: 16/04/2025 | Read: 3 Mins
https://stratus.campaign-image.com.au/images/27408000010600568_zc_v1_1741139917339_new_feature_2.png
   

As a trusted SMSF administrator to trustees of Self-Managed Superannuation Funds (SMSFs), it is imperative to ensure strict adherence to the legislative and regulatory requirements that govern the proper separation and ownership of fund assets. 

 

One often overlooked, yet critical, compliance requirement is the need for a Declaration of Trust or Acknowledgement of Trust—particularly in situations where the legal title of an SMSF asset does not reflect the beneficial ownership by the fund. 
   

Legal Framework and Trustee Obligations
   

The Superannuation Industry (Supervision) Regulations 1994, specifically Regulation 4.09A, mandates that trustees must keep SMSF assets separate from personal assets. Furthermore, under Section 52(2)(d) of the SIS Act 1993, trustees are required to ensure that all assets of the fund are held under a legally recognised trust structure. 

 

The Australian Taxation Office (ATO), in Media Release NAT 2005/37, has reiterated that assets of an SMSF must be recorded in a way that clearly reflects ownership on behalf of the fund. 
   

Failure to comply may result in:

 

  1. Breaches reported in auditor contravention reports 
  2. Penalties under Section 34 of the SIS Act (up to $11,000) 
  3. Reputational risk and audit complications for clients 
https://stratus.campaign-image.com.au/images/27408000010600568_zc_v1_1744775355723_trustdeed11.gif

Declaration of Trust vs Acknowledgement of Trust
   

 

Declaration of Trust 

 

 

Acknowledgement of Trust 

 

 

Executed prior to acquisition of the asset 

 

 

Executed after the asset has been acquired 

 

 

Confirms trustees intend to acquire the asset for the benefit of the SMSF

Confirms the asset is already held in trust for the SMSF

Establishes a clear legal relationship at the point of purchase 

Rectifies legal records where beneficial ownership is not documented
   

Responsibility of SMSF Administrators and Trustees to Maintain Trust Documentation
   

It is the responsibility of SMSF administrators and trustees to ensure that all fund assets are correctly held in trust, with appropriate documentation to support legal ownership. Under Guidance Statement GS 009 (Paragraph 328), auditors are required to verify this compliance. Where sufficient documentary evidence—such as a signed declaration or acknowledgement of trust—is not available, the auditor may be required to report the issue as a potential compliance breach to the ATO. 

 

To avoid such outcomes, it is strongly recommended that SMSF administrators and trustees ensure a copy of the executed trust documentation is retained in the fund’s permanent file. 
   

Trustdeed – Your Trusted Partner in SMSF Compliance
   

At Trustdeed, we provide high-quality, legally compliant trust documentation to support SMSF administrators and trustees in meeting their obligations with confidence. 

 

Our offering includes: 

  • Professionally drafted trust documents prepared to meet current legislative requirements 

  • Competitive pricing – just $275 (incl. GST), one of the lowest rates available in Australia 

  • Instant document access upon successful purchase 

  • Simple, free registration process 

  • 100% money-back guarantee if you’re not fully satisfied 

Professional Responsibility, Simplified 

As a professional, helping your SMSF clients maintain full compliance is both a regulatory and ethical responsibility. The use of a Declaration of Trust or Acknowledgement of Trust is a simple yet highly effective measure to protect your clients' interests and ensure audit-readiness. 

 

For further assistance or professional support, please do not hesitate to contact us.
   
   

Follow Us On

 You are receiving this email as you signed up for our newsletters.

 Want to change how you receive these emails?

You can Unsubscribe or Update your preferences
 
click here to unsubscribe from the mailing list
Share