The SMSF Deed – Your Client’s Legal Backbone

For accountants supporting SMSF clients, the trust deed is the starting point for every compliance and strategic decision. As investment options expand—particularly into areas like cryptocurrency, property, and private lending—many older deeds are proving inadequate or overly restrictive. A deed that isn’t aligned with current legislation or investment activity can expose trustees to compliance breaches and limit strategic flexibility.

Key Considerations for Review:

• Is the deed compatible with the fund's current and intended investment activities (e.g., cryptocurrency?
• Does it permit digital recordkeeping, e-signing, and modern pension structures?
• Has it been updated to reflect recent changes in legislation or ATO guidance?

Useful Tip: When clients initiate new investment activity, always review deed compatibility before execution. Updating the deed in time can prevent downstream audit risks and potential regulatory issues.

The Sole Purpose Test under section 62 of the SIS Act remains a core ATO compliance focus, particularly where SMSFs are investing in novel or high-risk asset classes.

Compliance Red Flags Accountants Should Watch For:

• Trustees deriving any present-day benefit from fund assets (e.g., use of SMSF-owned crypto wallets for personal purposes)
• Investment strategies that do not reflect actual practice (e.g., high-risk or speculative activity not addressed in the fund’s strategy)

• Lack of documentation, or failure to demonstrate commercial terms for related-party transactions.

• Arm’s length arrangements are key. Renting to family is not automatically non-compliant—market rent and proper processes matter.
• The trustee’s personal motives (e.g., wanting to help their child) are not enough to prove a breach, unless they influence the fund’s decisions.
• The purpose of the investment matters at the time it was made, not what happens later.
• Good documentation and timing are critical—accountants should help clients keep clear records and review deeds and strategies before acting.

Cryptocurrency is a form of digital, unregulated money that uses encryption techniques to control the creation of units and verify transactions, operating independently of any central bank.

• SMSF deed explicitly permits cryptocurrency investment
• Crypto assets are held in a wallet exclusively in the fund’s name
• Investment strategy clearly addresses crypto-related risks, including volatility, liquidity, and diversification
• Independent and auditable valuation methods are used for year-end reporting
• Transaction history and ownership documentation is complete and available for audit

• Blurred ownership between personal and fund assets
• Wallets held under trustee names instead of the fund
• Absence of updated investment strategies or resolutions approving crypto investments
• Significant losses or value shifts not documented or explained

 Useful Tip: Encourage clients to keep cryptocurrency exposure within a reasonable threshold, and ensure   their strategy reviews are conducted at least annually.

1.  Conduct trust deed reviews across your SMSF client base, especially for funds established over five years ago

2.  Identify clients with crypto, collectibles, or overseas investments for targeted compliance review

3.  Standardise investment strategy templates to include crypto and high-risk asset categories

4.  Engage SMSF auditors early when clients make non-traditional investments

5.  Educate trustees about their responsibilities around ownership, documentation, and recordkeeping

• SMSF deed reviews and updates
• Setting up SMSF with individual or corporate trustees