Part of the responsibilities of being a trustee for your self-managed superannuation fund include taking and keeping trustee minutes that keep a record of all major decisions made by the fund. So, what exactly needs to be minuted and what should it look like?
Minutes and resolutions
Like most minutes at any kind of meeting, an SMSF minute is a record of a decision made, or matter reviewed.
A minute will most likely include a resolution, which could be as simple as:
The trustees of XYX superannuation fund resolve to maintain their current investment strategy.
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 pools 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 to that, 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 would also need to 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?
But what should a minute look like? Is there a standard template? The Superannuation Supervision Act (SIS Act) 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
Date 25 October 2019 Venue 15 Oxford St Attendees A Smith, B Smith and C Smith Agenda Change to investment strategy
- 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 per cent 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 followed.
- 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.
Trustee A Trustee B Trustee C
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As you can see from the above, a minute does not have to be a complicated or extensive document. It 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.
Here is a minute for a two-member fund where one member is now joining the other in retirement and will receive a pension from the fund.
Meeting of Apple SMSF
Date 2 December 2019 Venue 15 Oxford St Attendees E Apple, G Apple Agenda G Apple to transfer from accumulation to pension phase
- 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 $1.6 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, as a result of the change to the investment strategy, investments x, y and z will be sold and the proceeds will be 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 December 2019 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 more than $1 million in his pension account when he retired.
- 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 Apple SMSF will pay G Apple a pension of $500 a fortnight from 10 December 2019 for the remainder of the financial year
Trustee A Trustee B Trustee C
—————— —————– ——————
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 better to have too much information than not enough.