Monday, September 12, 2011

Change of Trustee for a single member fund

Belinda Thalakada, Cleardocs Support

Recently we have had a number of customers enquiring about how to complete a change of trustee for a single member super fund either to or from a structure with two individuals as trustee. These customers noticed that upon completing the online form and clicking ‘Save & Continue’, the interface would alert them to an error.  The error suggested the proposed structure was legally non-compliant even though it was. If you have a single member self managed superannuation fund with individual trustees, superannuation law requires there to be no more (or less) than two trustees. If the fund has more than two individuals as trustees, then it can no longer be a single member fund as all trustees are required by law to be members of the fund also.
When completing a change of trustee to replace a company with individuals or vice-versa, you would select ‘1’ for the number of members of the fund. This prompts the interface to ask who the other trustee is, or if the current trustee is a company, whether there are any non-member directors of the trustee company. Before you continue filling out the interface, the ‘SMSF validation check’ will show the sole member as a ‘Member’ and the other individual will appear as ‘Other trustee/director (non-member)’.
If you have a single member fund with 2 individual trustees and you wish to change a trustee the interface will prevent you from completing the order.Given this limitation with our interface our recommended approach to complete the order as a two member fund (as opposed to a single member fund with two trustees). We will then refer you to our lawyers at Maddocks in order for them to make the necessary amendments to your deed and other relevant documents in this package. A small fee may be payable.

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