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On this page
- 1. Establishing the fund
- 2. Adopting an investment strategy
- 3. Changes to the investment strategy
- 4. Purchasing or divesting an asset (and transfer balance reporting)
- 5. Starting up a pension
- 6. Amending a trust deed
- 7. Appointing a fund administrator/accountant or auditor
- 8. Adding or removing a member
- 9. Approving annual returns and accounts
The Superannuation Industry (Supervision) Act 1993 states the following with regard to when minutes need to be kept:
(1) If a superannuation entity has a group of individual trustees, the trustees must keep, and retain for at least ten 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 ten 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 ten years, a record of all decisions made by the trustee in respect of matters affecting the entity.
Obviously, it is difficult to hold a meeting of just one person, so the Act only requires members of single member funds to keep records of all major decisions. But what exactly does the phrase ‘matters affecting the entity’ mean?
The following checklist covers most major events that will require meetings and minutes. A number of the below matters could be discussed at the same meeting but all must have individual resolutions (a record of a decision made) in the SMSF minutes.
You can download and print the checklist if you’d like to check off each meeting.
Continue reading for explanations of each item on the list.
1. Establishing the fund
A meeting should be held of the SMSF members right at the beginning when the decision is made to establish the fund. This meeting is a good opportunity to discuss and draft the investment strategy for the fund and get across the risk profiles of all the individual members.
2. Adopting an investment strategy
Once members have decided on an investment strategy they will need to adopt it unanimously at a trustee meeting. If members have very different approaches to investment risk, negotiation will be needed around establishing the fund’s asset allocation and this will all need to be documented in the investment strategy. The trustee minute should include a resolution that simply states: “All members of XYZ fund resolve to accept the attached investment strategy for the fund.”
Insurance needs also need to be included in an investment strategy and the resolution to adopt a strategy should specify that insurance needs of members have also been considered. You can find more articles on investments and investment strategy here.
3. Changes to the investment strategy
Any changes to your investment strategy need to be discussed at a trustee meeting and agreed upon by all members. It’s not enough for one member to say that they want to leave more of their funds in cash, they need to have some idea of projected returns of such an investment and explain to all members whey such an investment would improve their retirement outcomes. Any change needs to be minuted with a resolution that states that all parties agreed on the change.
4. Purchasing or divesting an asset (and transfer balance reporting)
If, as a result of an investment strategy change, an asset is bought or sold, this needs to be minuted when the decision is made. Transactions need to be made at arm’s length and if there are members in pension phase in the fund, transfer balance reporting of the transaction may also be required.
5. Starting up a pension
A meeting should be held when a member transitions from accumulation to retirement phase. An actuarial certificate will be needed when the member starts drawing down a pension and there will also be transfer balance event reporting requirements. All of this needs to be discussed among members at a meeting and documented in a minute.
6. Amending a trust deed
The trust deed is effectively a fund’s operating manual so any changes are important matters that need to be discussed and for which trustee meetings need to be held. Even if they are simple amendments, such as allowing a fund to pay a pension, a meeting could be a good opportunity to discuss potential future changes – such as allowing different types of investments.
7. Appointing a fund administrator/accountant or auditor
You may decide during the course of operating your SMSF that you would like to use a service provider, such as a fund administrator. You will probably also use an accountant and you are required by law to appoint an independent auditor to audit your fund each year. Each of these decisions to appoint professionals needs to be discussed and agreed on by all members and documented in a minute.
8. Adding or removing a member
If you wish to add members to your fund, or members want to leave, these decisions and the reasons for them should be discussed by remaining members and documented in a minute. A trustee meeting should definitely be held in the unfortunate event that a member needs to be removed as this is not a simple process.
9. Approving annual returns and accounts
Each year you will need to complete your fund’s accounts and annual return which needs to be lodged with the Australian Taxation Office. Completing your accounts requires your assets to be valued as at 30 June each year, which may require independent valuations. Final asset values for investments must be understood and agreed upon by all members at a meeting and all should have copies of the fund’s annual accounts.
The bottom line
Trustee meetings, and their resolutions and minutes, are meant to ensure that all members are across all matters concerning the fund. By requiring all members be involved, it makes sure that no party is better informed than any other.
We hope our checklist will assist you in holding frequent trustee meetings and documenting all decisions. Don’t forget – a trustee minute isn’t a complex document; just a statement of what has occurred during the meeting and what was resolved.
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