SMSFs
1. Why should I choose a DBA SMSF?
In short, DBA’s SMSF deed and related documentation is among the highest quality and up to date in Australia. More information.
2. What are the features of DBA’s deed or where can I get more information?
See questions 14-24.
3. Should my SMSF have a corporate trustee or individual trustees?
We generally recommend that an SMSF have a corporate trustee, rather than individual trustees.
The major disadvantage of a corporate trustee is the up-front cost of establishing the company. However, there are longer-term benefits of having a company which generally outweigh the extra costs. These benefits can be summarised as follows:
| Corporate Trustee | Individual Trustees |
|---|---|
| Continuous succession A company has an indefinite life span; in other words, it cannot die. Therefore, a corporate trustee can make control of a SMSF more certain in the circumstances of the death or incapacity of a member. | Ceases upon death If the SMSF has individual trustees, eg, a mum and dad SMSF, then timely action must be taken on the death of a member to ensure the trustee/member rules are satisfied. (SMSF rules do not allow a sole individual trustee/member SMSF.) |
| Administrative efficiency When members are admitted to, or cease, membership of the SMSF, all that is required is that the person becomes, or ceases to be, a director of the corporate trustee. The corporate trustee does not change as a result. Therefore, title to all the assets of the SMSF remains in the name of the corporate trustee. | Extra and costly paperwork To introduce a new member to an SMSF with individual trustees requires that person to become a trustee. As trust assets must be held in the names of the trustees, this will require the title to all assets to be transferred to the new trustees when a member is admitted to or exits the fund. |
| Lump sums and pensions An SMSF with a corporate trustee can pay benefits either as pensions or as lump sums. | Lump sums only payable on commuting pension The member must surrender their pension entitlement if they wish to obtain a lump sum (as an SMSF must have its primary purpose of paying a pension). You cannot simply pay a lump sum benefit as extra paperwork is needed to evidence the pension entitlement first being requested and then being surrenderd. |
| Sole member SMSF You can have a SMSF where one individual is both the sole member and the sole director. | Sole member SMSF A sole member SMSF must have two individual trustees. |
| Greater asset protection As companies are subject to limited liability, a corporate trustee will provide greater protection where a party sues the trustee for damages. | Less asset protection If an individual trustee suffers any liability, the trustee’s personal assets may be exposed. |
| Estate planning flexibility A corporate trustee ensures greater flexibility for estate planning, as the trustee does not change as a result of the death of a member. | Extra administration and costs The death of a member requires there to be a change of trustee, and this gives rise to considerable administrative work and costs at an inopportune time. |
4. Does my SMSF deed need updating?
Any SMSF deed older than five years should be reviewed at a minimum. To help you decide whether your deed should be updated, please read
| Effective Date | Description | Impact |
|---|---|---|
| 24 Sept 2007 | Borrowing laws | Borrowing laws are amended to allow funds to borrow on a limited recourse basis to acquire permitted assets (ie, via instalment warrant-type arrangements). |
| 1 July 2007 | Terminal Medical Condition benefits | New laws and regulations enacted in early 2008 allow persons with a ‘Terminal Medical Condition’ to access their super as a lump sum tax-free. |
| 1 July 2007 | Substantial super reforms | Major reform of the superannuation system proposed to take effect |
| 1 July 2007 | New income streams | New account-based income stream (pension) and new transition to retirement income stream. |
| 10 May 2006 | Compulsory cashing abolished | Compulsory cashing rules are abolished, allowing members to accumulate indefinitely during their lives. |
| 10 May 2006 | Undeducted contributions | New cap on undeducted contributions applies from 10 May 2006 to 30 June 2007 of $1 million and generally $150,000 p.a. thereafter. |
| 1 Jan 2006 | Contributions splitting | Members can split contributions received after December 2005 with their spouse. Only 85% of deductible contributions can be split. |
| 1 Jan 2006 | Allocated pension changes | New, longer life expectancy pension valuation factors (‘PVF’) apply to pensions commenced after December 2005. Pensions commenced prior to January 2006 continue to use the old PVFs. |
| 1 Jan 2006 | Market linked pension changes | The term of a pension commenced after December 2005 includes the option of the member’s 100th birthday less their age at commencement of the pension, eg, if member is 65 they can choose a term of 35 years. The member may also choose the pension to be paid to the spouse’s 100th anniversary. |
| 31 Dec 2005 | DBPs transitional relief ceased | SMSFs can no longer commence DBPs. From 12 May 2004 to 31 December 2005, SMSFs were required to satisfy certain criteria before a DBP could commence. |
| 1 July 2005 | Non-commutable pensions introduced | Members can now access a non-commutable allocated or market-linked pension on attaining preservation age. Older deeds may need to be amended to ensure eligible members can access these pensions. |
| Sept 2004 | Market linked pensions | This new type of pension was introduced with unique features. |
| Mid-2004 | Gainful employment rules eased | Persons under 65 do not need to satisfy the gainful employment test. |
| Mid-2004 | Changes in the rules relating to when benefits paid | New test for when a benefit must be paid or commenced. Certain deeds needed updating to ensure compliance. |
| 12 May 2004 | Restrictions placed upon DBPs | Members of SMSFs now cannot be paid DBPs unless certain transitional rules are satisfied. |
| Oct 2003 | Pro-rating rules for pensions | Pensions commencing after September 2003 have new minimum pro-rating rules. |
| Mid-2003 | PDSs introduced | Upon certain events, a PDS might have to now be issued to members. |
| 1 July 2003 | Government co-contributions introduced | Government co-contributions made to the fund. Many deeds only contemplated employer and member contributions. |
| 1 July 2002 | Greater flexibility with regards to contributions and compulsory cashing introduced | Certain deeds needed updating to ensure compliance and to ensure internal roll-over provisions could be utilised. |
| Mid-2001 | Internal roll-overs of super pensions now treated as ETPs and taken into account to RBL purposes | Certain deeds needed updating to ensure compliance and to ensure internal roll-over provisions could be utilised |
| Mid-2000 | ATO replaced APRA as the regulator of SMSFs | Certain deeds needed updating to ensure compliance |
| 8 October 1999 | Section 17A introduced, which includes the member/trustee rules | The member/trustee structure of all SMSFs needed to be reviewed in order to ensure that s 17A was not being breached – some deeds required updating in order to ensure compliance |
| 31 May 1999 | BDBNs introduced | Previously, SMSF trustees had a discretionary power as to whether and to whom to pay a member’s benefit upon death – all deeds needed to be updated to allow members to now make BDBNs to bind the trustee to pay their benefit to nominated person(s) |
Companies
5. Why should I order a company from DBA?
Click here for information relating to ordering a new company from DBA.
Trusts
6. Why should I order a trust from DBA?
For information regarding why you should order a DBA trust, please read
Some good reasons to use our trust deeds
The importance of a quality trust deed
- DBA provides high quality, innovative trust deed packages that provide maximum flexibility in relation to the latest planning strategies.
- Buying a quality package actually saves you money. Our deeds are regularly reviewed and revised by some of Australia’s leading tax and succession planning lawyers so that the latest tax and trust law changes are accommodated. Each deed package is reviewed and signed-off by a lawyer.
- DBA focuses on trust documentation and related services. We work at the ‘coal face’, handling technical queries on a daily basis. We have the resources and technical skills to keep up to date with ongoing developments and provide ongoing technical support and assistance throughout the life of the trust.
- Our trust deeds are written to be easily understood and the trust easily administered. We cater for different types of amounts to be included in tax law income to ensure the deed is not restricted to trust law income. Our trust deeds are maintained by experienced taxation lawyers who keep abreast of important court or tribunal cases, ATO rulings or legislative amendments which affect the operation of our trusts.
- Many other suppliers of trust deeds are using antiquated precedents and do not provide technical support, which can give rise to significant tax and legal problems.
- A trust is difficult to vary. A subsequent variation of a trust deed can give rise to a raft of tax and stamp duty issues.
- Because DBA is a leading tax, estate planning and superannuation law firm, we also provide related tax and succession planning advice and services.
Pricing
7. Is GST included in the price?
All prices quoted on this website include GST. Note that courier costs and other disbursements are generally not included in quotes.
SMSFs
8. How do I order?
Download the order form in Adobe Acrobat format by clicking on the order form button at the top of the relevant product page. (Alternatively, contact us and we will send you the form.) Send or fax the completed form to our office.
9. Should I send in payment when I send in the order form?
- If ordering from DBA Lawyers Pty Ltd, payment should only be made once an invoice has been issued to you.
- If ordering from DBA Network Pty Ltd, send in payment when you send in the order form.
Delivery
10. How will products be delivered to me?
Generally, we courier standard products throughout Australia for same day or next day delivery. This cost is added to the invoice.
11. What does ‘POA’ mean?
POA stands for ‘price on application’. If a product is marked POA, we can provide an estimate once we have a clear idea of what is required.
12. Will you ever charge me more than the amount quoted on this website?
As a general rule, no. However, where is a product is ordered without a completed DBA order form or without complete documents provided, we may need to contact you to advise that in order to complete the product the quoted fee may need to be adjusted. Also note that courier costs and other disbursements are generally not included in quotes but are added to the invoice.
Also, prices do not include our time involved in advising you, meeting with you to sign or complete the documents or attending to the lodgment of forms with the ATO or State Revenue Office for affixing stamp duty. Therefore, advice and special instructions may give rise to an additional fee for professional services where it is outside the scope of a standard product order. Naturally, you will be advised if any additional professional charge will apply. Consultations, meetings and advice are charged on our hourly fee rates. If the service/product you order requires additional work, we will contact you for your approval before commencing the additional work.
13. Are all prices quoted in Australian dollars?
Yes.
DBA Deed
- Due to the enormity of the recent superannuation reforms, especially the 1 July 2007 ‘Simpler Super’ reforms, we recommend that everyone consider the need to upgrade their deeds. This is particularly critical where the members of an SMSF intend to consider superannuation or retirement planning in the near future.
- We acknowledge that if deeds have been updated recently, some may prefer not to upgrade them again immediately and may do so on a case-by-case basis. We strongly recommend, however, that such deeds be reviewed in detail before any major decision is implemented, eg, commencing an income stream, making substantial contributions, splitting a contribution with a spouse or undertaking their estate planning.
14. 1 July 2007 (‘Simpler Super’) Changes
DBA deeds are fully up-to-date with the latest laws, including the substantial changes brought about by the Simpler Super reforms which took effect from 1 July 2007.
15. How often must an SMSF’s deed be upgraded?
In our experience, a deed should generally be upgraded every four years. However, to assist in determining which deeds need to be upgraded, we offer the following general guidance:
To assist in determining whether an SMSF deed needs to be upgraded, please refer to question 4 under the SMSF heading on this page for a list of dates of significant changes relating to SMSFs.
An up-to-date deed is necessary to ensure compliance with the latest laws. It is also best practice for advisory firms to use up-to-date deeds for ease of administration of their clients’ funds and to maximise flexibility for their clients.
16. Does DBA’s deed allow the trustee to borrow under an instalment warrant-type arrangement?
Yes. DBA’s deed allows the trustee of the fund to borrow in accordance with section 67(4A) of the Superannuation Industry (Supervision) Act 1993 (Cth), ie, the new instalment warrant-type arrangements which have been permitted since September 2007.
Note, many deeds, even recently revised deeds, have insufficient powers which would not be accepted by banks who typically review all SMSF deeds before lending. All SMSF trustees proposing to borrow should have their deed thoroughly reviewed and upgraded if necessary.
17. Does DBA’s deed allow a Terminal Medical Condition benefit?
Yes. DBA’s deed allows a benefit to be paid to a person with a ‘Terminal Medical Condition’. Some deeds may not allow such a benefit to be paid and an upgrade may be necessary.
18. How does succession to the ‘trustee’ role operate under DBA’s deed?
DBA’s deed has been carefully drafted to maximise succession planning opportunities.
The deed allows a member’s Legal Personal Representative (‘LPR’) to stand in as a trustee (or director of the corporate trustee) if the member has died, is under a legal disability or, eg, has moved overseas and has appointed their LPR via an Enduring Power of Attorney in order to ensure the fund remains a resident fund. These strategies are not always permitted under some deeds.
If the fund has individual trustees, the deed also allows a member to nominate a ‘successor trustee’ during their lifetime to step in on their death, which helps to minimise the uncertainty of who will take control of their fund after the death. Note, if the fund has a corporate trustee, any nomination of a ‘successor director’ must be provided for in that company’s constitution (DBA’s company constitution allows this nomination to be made: Click here for more information on DBA’s company).
19. Does DBA’s deed allow for the new types of pensions?
Yes. The deed allows Account-Based Pensions and Transition to Retirement Income Streams to be paid.
The deed also allows an existing Allocated Pension to be converted to an Account-Based Pension and a Non-Commutable Allocated Pension (aka Transition to Retirement Allocated Pension) to be converted to a Transition to Retirement Income Stream.
The deed also facilitates a Transition to Retirement Income Stream becoming an Account-Based Pension once the member has satisfied a condition of release (eg, retirement or attaining 65 years).
20. Does DBA’s deed allow for a Binding Death Benefit Nomination (‘BDBN’)?
Yes. DBA deeds post-June 1999 enable members to make BDBNs. Please refer to the BDBN information on our website for further information.
21. Does DBA’s deed allow for internal roll-overs of pensions? That is, does it have the flexibility to convert a pension back into the accumulation phase in the same fund?
Yes. DBA deeds post-June 2001 allow for internal rollovers. Note that many deeds supplied by others, including some who claim to be SMSF experts, do not allow this simple but basic strategy.
22. Does DBA’s deed come with a Product Disclosure Statement (‘PDS’)?
Yes. All DBA deeds (both new and varied) come with a personalised PDS for each Member at no extra cost. Please refer to the PDS information on our website for further information.
We are aware of many deed suppliers who rely on an exemption in the Corporations Act 2001 (Cth) to avoid supplying a PDS or do not provide a separate PDS to the deed. However, this exemption is difficult to satisfy and raises significant compliance risks. Further, the PDS assists advisers in informing their clients about the features of an SMSF and is an invaluable educational tool.
23. What types of contributions are covered by the DBA deed?
Contributions may be made in kind (subject to certain restrictions) or in cash. The DBA deed permits contributions to be made as permitted by superannuation law. In particular, members (ie, undeducted contributions and self-employed contributions), employers and their associates, spouse contributions and government co-contributions.
The DBA deed also allows excess contributions tax to be paid by the fund.
24. Does DBA’s deed allow for contributions splitting?
Yes. Contributions splitting came into effect on 1 January 2006. DBA deeds post June-2001 have the flexibility to allow for this. Those with older deeds should upgrade.
