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SMSF Trust Deed

Table of Contents of our SMSF Trust Deed

If SMSF is your biggest asset, then it is of paramount importance that you have a Trust Deed that complies with Superannuation law and is flexible enough for you to implement various available strategies.

Click here to read Table of Contents of our Trust Deed.

We claim that our SMSF trust deed is better because our Deed clearly mentions (prescriptive) what the trustees can or cannot do – instead of leaving it to the trustees or their advisors to search up dated superannuation law.

Our SMSF Trust Deed is customised to your requirements and is created depending on how you answer some of the questions while building your SMSF deed. Our smart system picks up the various relevant clauses to be included in your final Trust Deed.

What is included in our Trust Deed?

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Our Trust Deed is up to date and includes legislative changes up to 15th March 2013 and includes the following provisions to name a few:

  • accept the Governments new low income super contributions
  • refund contributions received by the fund in excess of the non-concessional contribution cap and refund excess concessional contributions to a maximum limit of $10,000 if offered by the regulator;
  • ensure that trustees keep monies separate from their own, consider to hold a contract of insurance,
  • give powers to trustee to purchase insurance policy for the liquidity of the fund and investments in personal use assets as per the new rules;
  • allocate any contributions within 28 days after the end of the month in which contributions are received;
  • borrow as per the new LRBA rules Section 67A & B;
  • review investment strategy regularly, value assets are market value and the use of qualified independent valuer as per SISR 4.09;
  • automatically pay a reversionary pension to the nominated dependant beneficiary of the deceased member who was on pension to contra the effect of CGT on death (draft ruling 2011/D3);
  • set a cascading procedure to disburse superannuation interest of a deceased member in case of binding or non binding nomination with or without a nominated reversionary beneficiary;
  • non-lapsing binding death nomination forms;
  • Allow Trustees to pay the New Account Based Pensions;
  • Spouse Splitting of contributions;
  • Allow In-specie Contributions by members;
  • Accept the Govt. Co- contributions.

Our trust deed has over 200 clauses to include all available strategies; this explains why it is set out in 80 pages including a Product Disclosure Statement. Below are 40 odd clauses which are unique to our trust deed. You may call these clauses as Points of differences in our trust deed with others and which you will rarely find in other SMSF trust deeds (please also note plain English used in drafting these clauses) :-

Issue Clause in the Trust Deed
Declaration Requirement An individual who becomes a trustee or a director of the corporate trustee of the fund must sign a declaration in the approved form stating that they understand their duties and responsibilities as trustees of the fund
Minor as member The Trustee may accept to admit a minor as a member who is under 18 years of age who maybe a *child of the member, provided all legislative conditions for the membership as per superannuation law are complied specifically Section 17A (3) (c ) of SISA where a parent or a guardian can be a director of a corporate Trustee for a minor
Change of Residency Requirements Member(s) residing overseas may appoint by proper execution of enduring power of attorney other persons as individual Trustee(s) or director(s) of Trustee corporation and resign as individual Trustees or from directorship of Trustee corporation in Australia and hand over the control and management of the fund to Australian resident Trustee(s) to ensure that the fund remains a complying superannation fund and obtains tax concessions offered by the regulator. This appointment of Trustee or additional Trustees should be as per superannaution law
Decision by Trustee According to member balances Where there are individual Trustees, each Trustee will have one vote. Where there are two Trustees then all decisions by Trustees must be unanimous. Where there are more then two Trustees the decision of the Trustee must be by majority vote. Where there are four Trustees or when there is a deadlock in decision making, votes will be based on the balance of the member accounts of each member. In case of corporate Trustee, a decision of corporate Trustee of the fund shall be made in accordance to the constitution of the corporation.
Acceptance of Contributions The Trustees of the fund may accept contributions, as a *preserved payment, for a member from the following sources, inter alia:
  • the *member contributions;
  • another member;
  • a *spouse of the member (*eligible spouse contributions);
  • the member’s employer as *employer contributions;
  • another fund under contribution split rules;
  • any government body e.g. under the superannuation co-contribution scheme and low income super contribution; or
  • any other third party or person as prescribed in superannuation law.
Acceptance of in-specie Contributions The Trustees of the fund may accept contributions in cash or in-specie (transfer of assets) as prescribed in superannuation law. All transactions with related parties must be at arms length and Trustees must follow *In-house asset rules and its exceptions as specified in Section 71 of SIS Act and superannuation law
Non acceptance of Contributions The Trustee may not accept contributions for a member:
  • If the acceptance of such contributions would cause the fund to cease to be a complying superannuation fund;;
  • If the Trustee has not received a *tax file number for that member;
  • any contributions which are a rollover or an *employment termination payments (*ETP) from employer of a member; or
  • any contribution otherwise not permitted by superannuation law or are in excess of the amount of contributions that can be made, on the member’s behalf by the superannuation law.
Spouse Splitting arrangements The Trustees of the fund may accept a request for the transfer of contributions from one spouse member into an account of another spouse member, or a request for the transfer of contributions into another complying superannuation fund in which the spouse of the member is a member, so long as the contribution is accepted consistently with the terms of the SIS Act and SIS Regulations Division 6.7. These requests for transfers of *contributions splitting *superannuation benefit must be made in the prescribed form as per superannuation law.
Limits on Spouse Splitting after 5th April 07 The Trustee may accept requests for the following contributions to be split (splittable contributions):
  • 85% of all concessional contributions;
  • nil of non-concessional;
  • any other amount defined in the superannuation law as splittable contributions
Contributions more than new Limits A member of the fund may request the Trustee to refuse to accept from a participating employer or another person an amount higher than the *concessional contribution cap amount applicable to the member. Trustees may follow the request of the member and may refund any concessional contribution which they have received on behalf of a member in excess of $25,000 of the member or any other concessional capped amount prescribed in superannuation law.
Tax on contributions above the caps The member may, if permitted by superannuation law, nominate this superannuation fund to pay any extra tax liability imposed by the regulator as a result of concessional contributions received by the fund in excess of concessional contributions caps prescribed in the SIS Act and regulations. The Trustee should debit the account of the member with this extra tax paid to the regulator.
Non Concessional contributions A member of the fund may request the Trustee to refuse to accept from a member, member’s spouse or employer or another person a higher non-concessional contribution than *non-concessional contribution cap made on behalf of a member. Trustees may refund any non-concessional contribution which they have received on behalf of a member in excess of:
  • $150,000;
  • $450,000, if the member is under the age of 65 years, if the non-concessional contribution is to bring forward 2 years of non-concessional contributions;
  • $150,000 from a member over 65 years old provided they are gainfully employed; and
  • nil, if the member is over 75 years old.
Any refund of non-concessional contribution by the Trustee of the fund will be valid if it is allowed by superannuation law specifically to sub regulations 7.04 (1), 7.04(3), 7.04 (4) & 7.04 (7) of SISR and ATO ID 2007/225 & ATO ID 2012/79.
Co- contributions not counted as non-concessional contributions From 1 July 2007, Government co-contributions will not be counted towards the non-concessional contributions cap.
Sale of Business Contributions The Trustees may also accept contributions of up to indexed cap amount relevant for that financial year (2012–13 cap amount $1,255,000) from a member as non-concessional contributions, at any time, from the proceeds of the sale of small business assets. This cap or a higher indexed amount relevant for that financial year may include any capital gain tax exemption allowed to the member under the *relevant legislation.
Settlement of an insurance claim non-concessional contributions The trustee may accept contribution to the fund, from an insurance company or employer of the member or any other person, at any time, the proceeds from a settlement for an injury resulting in permanent disablement as non-concessional contribution on behalf of a member.
Self Insurance by the SMSF Trustee may purchase an insurance policy for liquidity of the fund; any premium paid by the fund must be debited to the income account. Any proceeds from these policy or policies, upon the death of the insured member, must be credited to the income account and after paying appropriate taxes the trustee may at the Trustee's absolute discretion use the proceeds from such insurance policy or polices including any investment or retiring of any debt of the fund, pay anti-detriment payment or set aside in a reserve account or crediting to all or surviving members various accounts on a fair and reasonable basis.
Contributions by over 65 year old members The Trustees may provide a declaration to the nominated or participating employer, if requested by the employer that the member is over 65 years old, that the member is gainfully employed on a *part time basis. Notwithstanding anything else in legislation, part time basis means that a member works at least 40 hours in a 30 day consecutive period in a year where contributions are made by the member or by the member’s employer.
Acceptance of some Employer ETP’s The trustee from 1 July 2007, may accept employment termination payments from the employer of a member, until 1 July 2012, if a member was entitled to such an eligible termination payment under their employment contract as at 9 May 2006. The trustees of the fund may accept employment termination payments up to a limit of $1 million cap.
Acceptance of Contributions in June Trustees may accept contributions on behalf of member and may credit contributions directly to members account or in the interim credit income account or a reserve account of the fund subject to superannuation law & specifically ATO ID 2012/16.

If a Trustee receives a contribution in a month in relation to an accumulation interest of a member, the Trustee must allocate the contribution to the member of the fund within 28 days after the end of the month consistent with SISR 7.8(2)(a)
Investments in Personal Use Assets …in personal use assets and *collectables or such investments that comply with the rules relating to such investments in the SIS Act or the SIS Regulations specifically Regulation 13.18AA of SISR & Section 62A of SISA;
Investment Strategy Trustees must prepare and implement an investment strategy for the fund. The strategy must take into account all of the circumstances of the fund and must be reviewed regularly (SISR 4.09 (2)) and takes into account the objectives of the fund and retirement goals of its members and:
  • Whether the fund should hold a contract of insurance that provides insurance cover for one or more members of the fund as per SISR 4.09 (2) (e);
  • the risks involved in making, holding and realising each investment;
  • the likely return from making each investment;
  • the range and diversity of investments;
  • any risks coming from limited diversification;
  • the liquidity of the fund’s investments;
  • expected cash flow requirements including reserving strategy to fund anti-detriment payments and
  • the ability of the fund to meet its existing and prospective liabilities such as paying benefits to its members
Keep Assets Separate The Trustees must deposit all monies belonging to the fund in the fund’s bank accounts promptly upon receipt; and keep fund monies separate from their own money (SISR 4.09A). Trustees must promptly pay all *transaction costs, *administration costs & expenses to creditors, income tax, supervisory *levy to the regulator and premiums to insurers of the fund.

If any asset for some legal reason cannot be held by the trustee on behalf of the fund then the Trustees must clearly document the fund's ownership of the asset with a caveat, legal instrument or a declaration of trust.
Valuations The Trustees must undertake all valuations of fund assets in Australian dollars on the balancing day at the end of the financial year or when required by superannuation law or where the Trustee otherwise sees fit to do so in case of member leaving or joining the fund during the year. Trustee must transfer any surplus or deficit in the valuation of assets to income account.

Trustee(s) must use a recognised Market valuation method for tax purposes, capital gain tax event and must base it on objective and supportable data. Trustee(s) must ensure that market valuations are arrived at using a 'fair and reasonable' process, where it meets all the following (SISR 8.02B):
  • It takes into account all relevant factors and considerations likely to affect the value of the asset.
  • It has been undertaken in good faith.
  • It uses a rational and reasoned process.
  • It is capable of explanation to a third party.
Trustees may use a *qualified independent *valuer where the value of the asset represents a significant proportion of the fund's value or the nature of the asset indicates that the valuation is likely to be complex.
New ASIC Approved Requirements The Trustee must appoint an approved independent auditor as required by superannuation law and from 1st July 2013, must ensure is registered with the regulator to conduct an annual audit of the records and accounts of the fund and is suitably qualified as listed under Schedule 1AAA of SISR and conducted an audit as per Auditing and Assurance Standards Board auditing standards including guidance statement GS 009
Allocation of Income of the fund The Trustee must determine the shared income and shared expenses of the fund to be allocated and credited or debited or timing of allocation to all member accounts in a way that is fair and reasonable as between all the members of the fund and various kinds of benefits of each member of the fund, provided the actions of the Trustee are not contrary to SISA 52(2) (a), (b) & (c) and requirements of superannuation law and allocation of income and expenses are consistent to SISR 5.1 to 5.3.
Reserves The Trustees may set up any reserve account either to
  • stabilise the investment earning of the fund according to reserving investment policy of the fund;
  • hold contributions received by the fund which are yet to be allocated to members;
  • provide for contingent expenses, or tax to be paid to the regulator;
  • fund a pension that are needed for solvency reasons as instructed by an actuary or as otherwise determined by the Trustee;
  • make a payment for any anti-detriment payment as per clause 205 of this deed.
  • may borrow or raise any financial accommodation and to assign, pledge, mortgage or charge any of the fund assets as security for any such financial accommodation in compliance with Section 67A & 67B of SIS Act under limited recourse borrowing arrangement;
  • may borrow from any one or more entity(s), to acquire a single acquirable asset and to carry out repairs and maintenance to that asset at the time of acquiring that asset, the borrowing can be from any person including member or trustee or a relative of a member or trustee as per ATO ID 2010/162, any company, trust, government or institution or any other related entity and give a charge over, or in relation to, an asset of the fund on terms satisfactory to the Trustee and to the extent that it is not limited by or contrary to SMSFR 2012/1 and Superannuation Law;
Family Law The Trustee must comply to any order for *payment split or agreement pursuant to a family law court order under Part VIII B of the *Family Law Act 1975 (Cth), in relation to the splitting of a *superannuation interest of a member with the members spouse on the breakdown of marriage or domestic relationship. The manner of splitting of superannuation interest, with spouse, must be in accordance with superannuation law.
Preservation Rules The Trustee may pay a *preserved benefit, to a member when the member has reached his or her *preservation age and *retires from gainful employment; or when the member has satisfied a condition of release as prescribed in superannuation law (such as, *retirement or when a member becomes totally and permanently or temporarily disabled, or under compassionate or financial hardship grounds, or when the member reaches the age of 65).

At the time of reaching a *voluntary cashing event and on request from the member, the Trustee may pay with consent of a member or beneficiary to whom a benefit is payable, transfer assets of the fund of an equal value of the benefit in lieu of paying the whole or any part of the amount under the provisions of this deed.
Payment of Benefits Trustee when paying a benefit as a lump sum or a pension to a member must pay the benefit to include any tax free and *taxable components in relevant proportions. These proportions will reflect total superannuation benefits of the member as at 30 June 2007 and any addition to each component from there after as per superannuation law.
Rollover from Pension phase to Accumulation Phase The trustees may, on the request of a member, rollover or transfer the benefit of the member from the pension account of the member to the accumulation account of the member,
Pensions & Oral Agreement to follow up with proper Pension Documents The Trustee may, on written request from a member, commence paying a pension to the member from the whole or part of the members benefit (*purchase price of pension) in accordance with superannuation law. The trustee must ensure that the member is entitled to all of their benefits to be paid as a pension from the fund upon attaining preservation age and no *cashing restrictions apply to that benefit under superannuation law.

Trustee must provide pension to the member in accordance to terms of this deed, any other governing rules such as pension agreement or any trustee resolutions.

Trustee must not pay a benefit to a member unless the member requests to be paid. An oral request to commence a pension, from the member to the Trustee for pensions commencing at the end of the fund year or beginning of fund year must be deemed adequate election by the member to commence a pension provided a written request by the member is forwarded to the Trustee at a later date, to give adequate time to Trustee to get the accounts of the fund finalized and audited, provided such an oral request does not contravene superannuation law.
Account Based Pensions An *account based pension is a pension where the terms of payment of the pension must comply with the limitations and requirements of sub regulation 1.06 (9A) of the SIS Regulations and other provision of the superannuation law.

The Trustee on request from a member may choose to apply the balance of the member's accumulation account to pay a benefit to the member as an account based pension. Trustee may commence an account based pension for the member with the following characteristics;
  • payments of a *minimum amount are to be made at least annually of *withdrawal benefit; and
  • the member may, in receipt of this pension, withdraw as much as they wish above the minimum amount, including the entire amount; and
  • the pension may be transferred only on the death of the member to a dependant as prescribed in superannuation law; and
  • the member must not use the capital value or income of the pension to borrow any funds from a third party; and
  • before a commutation of the pension in a financial year, the Trustee as per Reg. 1.07D (1) (d), must pay pension, in the financial year in which the commutation takes place, at least the minimum amount prescribed by sub-regulation 1.07D (2); and
  • do not permit the capital supporting the pension to be added to by way of contribution or rollover after the pension has commenced as per Reg. 1.06 (1) (a) (ii).
Low Balances & return of contributions The Trustee may pay to the member, on written application, a benefit to the member, if the balance of the account of that member is less than $200 in accordance with condition 111 of Schedule 1 of SISR.

Trustee may return a contribution above the concessional contribution cap to the regulator if offered by the regulator within 28 days of such an offer to the maximum limit of $10,000 as per release authority issued by the regulator as per item 112A of Schedule 1 of SISR.
Reversionary Pensions Trustee must not allow a member or a reversionary beneficiary to nominate a non-dependant of the member or reversionary beneficiary as a nominated beneficiary to receive a pension from this fund. A member or a reversionary beneficiary must only nominate a dependant as defined in section 10 of the SIS Act.
Actuarial Certificates The Trustee must appoint any actuary in accordance with superannuation law. The Trustee may reduce or increase the payments for any pension by any amount it considers reasonable in consultation with an actuary in accordance with superannuation law. Before making any pension payment for any complying pension, the Trustee of the fund must obtain an actuarial certificate from a registered actuary, if so required by superannuation law.
Partial Commutation of Pension Upon written request from a member who is in receipt of a pension, the Trustee must accept to commute a pension and pay a total or partial lump sum to the member, provided the commutation is in accordance with superannuation law and the conditions of release have been met by the member.

The Trustee must pay a partial or full amount as lump sum to the member proportionately to the member in ratio from taxable and tax exempt components as calculated on the crystallization date 30th June 2007 as per clause 134 & 135 of this deed and superannuation law.

Upon written request from a member who is on receipt of a pension, the Trustee must commute a pension of the member, if the commutation of the pension is in accordance with superannuation law. Any such balance of the pension account from such commutation must be added to any existing accumulation account of the member or in absence of any accumulation account, the Trustee must open a new accumulation account for the member.

If the Trustee commutes only a part of the pension to a lump sum, the Trustee must then adjust the amount of the pension payable in accordance with superannuation law.
Roll Out to Another Fund If a member requests in writing to roll over their benefit to another complying superannuation fund, and the Trustee accepts the request, the Trustee must affect this rollover within 30 days. The Trustee must ensure that the receiving fund is a complying fund before any rollover request is accepted. Along with the rolled over funds, the Trustee must send all the documents required by superannuation law to the receiving fund. Trustees may charge a reasonable fee and deduct this fee from the relevant account, before rolling over the amount to the receiving fund.
Transition to retirement pension Trustee of the fund may pay any pension as per clause 168 of this deed as a transition to retirement pension, where the member is gainfully employed and is under 65 years. Trustees must not allow the member to withdraw more than maximum annual payment limit of 10% of the account balance at the start of each year or not more than a maximum annual payment limit of 10% of purchase price of the pension, if the pension starts on any date during the fund year.

The Trustee, if requested by a member in writing or under a pension agreement can pay either an existing allocated pension, an existing market linked pension or an account based pension as a transition to retirement pension.

The Trustee must pay transition to retirement pensions consistently and as defined in regulation 6.01(2) of the SIS Regulations. However, such pensions must not be commuted (subject to certain exemptions) and must comply with limitation and requirements to each form of pension as prescribed in superannuation law.
Converting current pensions to new pensions The trustee may convert a current allocated pension and/or transition to retirement allocated pension to an account based pension from 1 July 2007 …..
Continue to pay life expectancy and other defined pensions The trustee may continue to pay all types of pension, which can no longer be commenced in a self managed superannuation fund and were being paid in accordance with superannuation law.
Non Lapsing Death Benefit Nominations A member may fill out a binding death nomination form, which directs the Trustee as to who should be paid a death benefit on death of the member. The member can either list his or her dependants and or legal personal representative on the form listed in schedule 2B, Part 2 of this deed.

A member may revoke a binding death nomination at any time. The Trustees are bound to follow the request of the member. A binding death nomination can be revoked by the member in writing; and the member can supply to the trustee a new binding nomination by supplying a new form as per schedule 2B Part 2 of this deed. The form is valid for an indefinite period (non-lapsing) and member’s signature must be witnessed by two unrelated non dependant adults.

The Trustee does not have to follow the direction of the member if the member has nominated a person who is a non-dependant, or the payment is to a person not eligible according to superannuation law and ITAA 1997 including Section 302.195.
Anti Detriment payments In the case of a death benefit, the Trustee may pay the benefit of a member to a beneficiary as a lump sum plus any benefit that would accrue to the fund if a deduction were allowed by reason of the application of section 295-485 of the ITAA 1997. The increased amount may be funded from any amounts set aside in a reserve account created for this purpose or from any insurance proceeds initiated for this purpose.

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For value for money trust deed is great and to provide a free review service is a great initiative thanks for that excellent work.

Gerry Luce
LB Solutions

I have been a customer of Trust for some time and I have always been impressed with their service. However, I am absolutely indebted to them for pointing out to me that I had made a typo when keying in the ACN of a newly incorporated company. Without this add on service which they provide, all the trust documents would have gone out incorrectly. Thank you so much.

Gail Freeman
FCA, Director
Gail Freeman & Co Pty Ltd (ABN: 57 008 653 683)

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