Adding a new trustee to your Self-Managed Super Fund (SMSF) is a significant decision and requires a precise set of steps to ensure compliance with superannuation legislation and regulations. Whether you’re bringing in a family member, accommodating a new Director, or updating trustees due to a death, every change must be properly documented to avoid breaches and penalties.
Key Steps for Enrolling a New Trustee
Every trustee or director change in an SMSF must be managed carefully. Here’s what you need to remember to ensure a seamless transition and stay on the right side of compliance.
1. Sign the ATO Trustee Declaration within 21 days
One of the most critical steps when appointing a new trustee or director is signing the ATO Trustee Declaration. The declaration, which confirms that the trustee understands their responsibilities, must be signed within 21 days of appointment. This document is legally required for all new trustees and is intended to ensure that they fully understand the role they’re stepping into.
Failure to complete this declaration within the 21-day window is a breach of compliance, so make sure it’s at the top of your list when a new trustee joins.
2. Update the SMSF trust deed and document all changes
The SMSF trust deed outlines the rules governing your fund, including the powers and responsibilities of each trustee. Any new trustee must be included in this deed, meaning it must be updated to reflect the latest structure of your fund.
Additionally, the appointment of the new trustee (or removal of a deceased or retired trustee) must be formally documented, typically through a meeting resolution. This documentation serves as an official record of the decision and shows the ATO that proper procedures were followed. If a corporate trustee structure is in place, ensure the trustee company’s records are also updated to reflect any new directors.
3. Lodge changes with the ATO and ASIC (if applicable)
Once the SMSF trust deed and internal documentation have been updated, the next step is notifying the ATO. Any changes to trustee or director status must be reported to the ATO within 28 days. This can usually be done online via the ATO’s SMSF portal or by completing and lodging the appropriate forms.
If your SMSF has a corporate trustee, you’ll also need to inform ASIC of any changes to the directors within 28 days. Failure to notify ASIC can lead to fines, so it’s crucial not to overlook this step.
4. Update bank and investment accounts
For operational ease and legal compliance, it’s also important to update all bank and investment accounts associated with the SMSF to reflect the new trustee or director. This ensures that the new trustee has proper authority over the fund’s assets and that all financial institutions involved are aware of the recent changes. Keeping these accounts up to date also prevents potential disruptions in managing the fund’s investments.
5. Review the SMSF’s investment strategy
Whenever there’s a significant change in an SMSF’s structure, including adding a new trustee, it’s good practice to review the fund’s investment strategy – see our previous article on updating investment strategies. The new trustee should understand and agree with the investment approach, as they will be responsible for helping to manage and implement it. A review also provides an opportunity to verify that the strategy aligns with all members’ goals and the fund’s overall objectives.
Key Compliance Reminders
Bringing on a new trustee or director to an SMSF is more than just paperwork; it’s about maintaining a strong foundation of compliance. Keep these reminders top of mind to ensure your SMSF operates smoothly:
- Complete the ATO Trustee Declaration within 21 days for new trustees.
- Document all changes to the SMSF trust deed, fund minutes, and trustee resolutions.
- Notify the ATO and ASIC (for corporate trustees) within 28 days.
- Update all bank and investment accounts to reflect the changes.
- Review and document any updates to the fund’s investment strategy for trustee alignment.
At Audit Your Superfund, we’re here to help you stay compliant at every stage. Contact us if you have any questions about bringing on a new trustee or any other aspect of SMSF management.