How to record SMSF minutes

Or as complex as a resolution segregating assets to start a pension for one member while another remains in accumulation phase. For example:

The two trustees of ABC superannuation fund resolve to split their funds into two. One pool will support Trustee A’s pension and the other pool will be Trustee B’s accumulation fund.

Asset X will be sold to Trustee A from Trustee B.

Asset Y will be sold and the proceeds will be invested in liquid Australian equities to support Trustee A’s pension.

Issues for which you would need to minute and keep the records include major decisions by the fund, such as the establishment of the fund, the addition (or loss) of a member and commencing a pension. The initial agreement on the fund’s investment strategy would need to be minuted as would any changes, along with approval of the annual financial statement.

Tasks such as appointing an auditor and an accountant also need a resolution from the fund and a minute recording that resolution.

Any changes to the trust deed must also be minuted. Changes could include allowing your SMSF to buy property or allowing it to operate a pension for a member.

What should a minute look like?

Even if you are the sole individual trustee of your SMSF, you still need to keep minutes of your decisions. But what should a minute look like? Is there a standard template?

The Superannuation Industry Supervision Act (1993) merely states that a minute must be kept (see below). It does not stipulate what a minute must look like.

Duty to keep minutes and records:

(1) If a superannuation entity has a group of individual trustees, the trustees must keep, and retain for at least 10 years, minutes of all meetings of the trustees at which matters affecting the entity were considered.

(2) If there is only one trustee of a superannuation entity:

(a) if the trustee is a corporate trustee – the directors of the trustee must keep, and retain for at least 10 years, minutes of all meetings of the directors at which matters affecting the entity were considered; or

(b) if the trustee is an individual – the trustee must keep, and retain for at least 10 years, a record of all decisions made by the trustee in respect of matters affecting the entity.

(2A) The trustee or trustees must also retain for at least 10 years an election, or a copy of an election, under section 71E.

Source: Superannuation Industry (Supervision) Act 1993 – Section 103

Below is an example of a minute for an investment change.

Meeting of XYZ self-managed superannuation fund

• It was noted that the Trustees were considering acquiring new investments in international shares through investing across the following investments:
  • International ETF A
  • International ETF B
  • Global fund C
• It was noted that the proposed investment would be for approximately 5% of the fund’s total asset base.
• It was also noted that the investment adhered to the fund’s investment strategy allocation guidelines and return expectations.
• It was tabled that the acquisition would be acquired from the fund’s current cash allocation and the resulting investment strategy allocations would then be as follows:
  • Australian equity: 40%
  • International equity: 20% (up from 15% but still within the 10–20% guidelines)
  • Fixed income: 10%
  • International fixed income: 5%
  • Property: 15%
  • Cash: 10% (reduced from 15%)
• It was unanimously resolved that the fund would acquire investments in the three international equity funds.

Signed by

Date:

As you can see from the above, a minute does not have to be a complicated or extensive document. It simply needs to state what the trustees have decided for the fund, and why.

The regulator likes all minutes to be written and in English. If they are kept electronically, they need to be easily accessible and understood. Minutes must be kept for all trustee meetings and resolutions.

Minutes for actions such as starting a pension will be more complex. The process of commencing a pension will also include other documentation, like a pension agreement or potentially a product disclosure statement, and an SMSF would do well to note the existence of the new documentation in the minutes.

Aaron Dunn, chief executive officer and co-founder of SmarterSMSF, says it’s also important to refer to a fund’s trust deed when commencing a pension. “Deeds will specify the format as to how certain things will apply,” he says.

Here is a minute for a two-member fund where one member (G Apple) is now joining the other in retirement and will receive a pension from the fund.

Meeting of Apple SMSF

• It is noted that as G Apple intends to commence a pension, and in accordance with Apple SMSF’s trust deed, G Apple has signed a pension agreement, which will be annexed to the fund’s trust deed.
• It is noted that the balance of member G’s accumulation fund to be rolled into retirement phase to support a pension does not exceed the current transfer balance cap of $1.7 million.
• It is also noted that the investment strategy of the accumulation pool will be changed to the investment strategy of the current pension pool.
• It is noted that, because of the change in investment strategy, investments x, y and z will be sold and the proceeds used to buy investments in a, b and c.
• It is noted Apple SMSF will start paying a pension of $500 per fortnight to G on 10 October 2021 to be paid for the rest of the financial year.
• It is noted a transfer balance account report (TBAR) will need to be lodged with the Australian Taxation Office by 28 January (28 days after the end of the quarter in which the transfer balance event occurred) as E Apple had a total super balance of more than $1 million.
• It was unanimously resolved that investments x, y and z will be sold and the proceeds will be used to buy investments in a, b and c.
• It was unanimously resolved that, in accordance with Apple SMSF’s trust deed and annexed pension agreement, Apple SMSF will pay G Apple a pension of $500 a fortnight from 10 October 2021 for the remainder of the financial year

Signed by

Date:

Final word

All minutes are legal documents and are required to be kept, so don’t forget to make one even if you think the conversation you had with your spouse or fellow SMSF member was quite informal. And err on the side of caution when it comes to what information to include. It’s always better to have too much information than not enough.