ATO Trustee Declarations – Getting it right and what happens if you don’t.

ATO Trustee declarations are a hot topic for SMSF Trustees, SMSF Accountants and SMSF Auditors. Why is it that such an easily overlooked form is such a trigger point for all of your SMSF’s stakeholders?

Before 1 July 2007, ATO Trustee declarations were not a requirement and plenty of SMSF’s were in existence. Trustees were appointed through deed creation, and consenting to act as an individual trustee or director of a corporate trustee or trustee company by way of declaration was. about. it. And as memory serves, you also had to register with the ATO I believe.

Legislation amendments to the Superannuation Industry (Supervision) Act 1993 (otherwise known well by Superannuation professionals as “SISA”) were introduced around 1 July 2007 which required SMSF’s and their Trustees / Corporate Trustee directors to complete what is known as the “ATO Trustee Declaration” form.

At the time, plenty of SMSF’s were caught off guard in the sense that the legislation required anyone who is a NEW trustee appointed from 1 July 2007 onwards (without exception), to now ensure that they fully execute their ATO Trustee Declaration form.

As I look on their website they even require trustees to complete the declaration if they “have undertaken an ATO Approved course of education to comply with an education direction.” And “are a legal personal representative” appointed as a trustee or director on behalf of a member” - under 3 distinct circumstances including death, legal disability or in enduring power of attorney situations. In situations of a legal disability, this may also mean that if you are a member but not yet allowed to be a trustee due to your age, then your personal legal representative (such as a parent) must sign the form on your behalf. Then when the minor reaches age 18, they will need to execute their own ATO Declaration.

Trustees are expected to read each section of the form carefully before completing it and understand all of the information it contains.

They are expected to sign it with Wet Ink and date it on the day of their appointment and date it accordingly, in front of another individual who is witnessing them doing it who too must sign with wet ink and date it in front of the trustee. This task alone means being an SMSF Trustee is nothing to be scoffed at. If this doesn’t signal SMSF’s are serious business I don’t know what does. Of course this is only the start of a longer journey for most trustees.

In the ATO’s official filename convention this is also known as NAT 71089 which Is returned if you put it in your search engine.

The ATO wants trustees to then keep these documents in their files for as long as they are trustees and a further 10 years after they stop being trustees. I learned this the hard way. I must admit I myself was caught out by this requirement despite me thinking I knew it all.

What does the ATO Trustee declaration really mean?

You are attesting to terms such as responsibility and compliance with the SIS Act 1993 which is the same as SISA as mentioned earlier. This includes staying informed of changes to the legislation – yes, that’s on you. And if you do not stay compliance the ATO is basically warning you that you might be given administrative penalties, or write to you with a direction to do something in the realm of being a responsible trustee, maybe with an agreement, or in more severe cases where you have blatantly ignored the purpose of superannuation, disqualify you, or prosecute you. Now, ive very rarely seen this in action. Then again SMSF Auditors don’t really hear about much of this due to privacy reasons. Only unless it becomes public through the media.

Sticking to compliance with SISA, the sole purpose of superannuation, trustee duties, contributions and benefit payment rules, investment restrictions such as arms length transactions, and ensuring the funds administration and the requirement to maintain documentation for 10 years or more and financial records for 5 years or more are the main points covered by this ATO Trustee declaration. But of course you must read it yourself and ensure you understand the nuanced points and principles of the ATO Trustee declaration and ultimately being a trustee.

I, as your auditor am looking at these quite thoroughly as im required to do so. When im conducting your SMSF Audit, im looking to see whether or not you were appointed after 1 july 2007, and, if you are, whether you validly executed and maintained this since your appointment date. In cases where you misplaced it, or simply did not ever do it, you would need to promptly execute one and have it witnessed and dated on the day. This will result in a qualified audit opinion regarding this compliance issue but it starts and ends there.

You can see the webpage link where the ATO Trustee declaration lies HERE