Bryce Figot, special counsel for DBA Lawyers, said that since 2007, new SMSF trustees/directors must sign a trustee declaration under s104A of the Superannuation Industry (Supervision) Act 1993.
However, it was not clear how long the declarations should be retained or what to do if the declarations are lost.
In December 2024, the issue was discussed at the SMSF Auditors Professional Association Stakeholder Group meeting and according to the ATO website one of the main issues identified from compliance cases includes “a failure of the auditor to check that trustee declarations have been … retained under regulation 104A [presumably the ATO mean ‘section’, not ‘regulation’]”.
Figot said that a similar search on the Tax Office website from the group’s July 2024 meeting also said the same thing.
“So, how long must a s104A trustee declaration be retained for? Assume that an SMSF was established in 2008 with individual trustees. Also, assume that no changes in trusteeship have occurred. Does that mean that today, more than 10 years after establishment, there is no need to retain the declarations?” he asked.
“Similarly, does that mean that today, there is no need for the SMSF’s approved SMSF auditor to check for trustee declarations?”
He continued that on the ATO webpage QC 45566, the regulator publishes tables that set out the minimum that the ATO expect to see evidenced in an SMSF audit if the ATO were to carry out a compliance review concerning an SMSF auditor.
The table states that for s104A under the SIS Act, the auditor should obtain evidence that all trustee declarations have been signed and retained as required by:
- Sighting a signed trustee declaration for each individual SMSF trustee or each director of the corporate trustee relevant to the year under audit, and retaining these on the audit file.
- Seeking written confirmation from trustees that the trustee declarations are kept on file for at least 10 years (in trustee representation letter), especially if changes occurred during the year prior to engagement with the auditor.
Signing the ATO trustee declaration applies to new trustees and directors from 30 June 2007 and trustees who have undertaken an education course in compliance with an education direction.
“The Auditing and Assurance Standards Board issues Guidance Statement GS 009 Auditing Self-Managed Superannuation Funds, which contains ‘the specific criteria and corresponding provisions … which are required to be reported on in the auditor’s report and the ACR’,” Figot said.
“Here, the GS 009 states: ‘Maintains trustees’ declarations about understanding their duties for those who become trustees for the first time after 30 June 2007, kept for as long as relevant OR at least for 10 years’. Note the use of the word ‘or’. This implies that after 10 years, the declaration no longer needs to be retained.”
GS 009 states: “316. In auditing the SMSF’s compliance with the requirements regarding establishment and operation of the SMSF, the auditor conducts testing to determine that: … (d) the SMSF has and retains trustee declarations of duties signed by any new trustees after 30 June 2007 for at least 10 years”.
“However, on ATO webpage QC 63436, the ATO states that auditors: ‘must keep your completed declaration for the life of the SMSF and for at least 10 years after your SMSF winds up’,” he said.
“Furthermore, the actual declaration (ATO code NAT 71089-06.2021) contains the following text: ‘I must ensure this document is retained for at least 10 years or while I remain a trustee or director of the corporate trustee (whichever is longer)’.”
Figot said the conflicting material on how long a s104A trustee declaration should be retained for can be confusing and that he has seen the Tax Office criticise auditors for not having copies of s104A trustee declarations.
“This is even where the trustee/directors were appointed more than 10 years ago (but after 30 June 2007),” he said.
“Accordingly, I have seen the ATO take the view that the s104A trustee declarations are retained for life of the SMSF, or potentially at times even longer. I do not comment on the correct legal view. Nor do I comment on industry practice. However, I do observe that most approved SMSF auditors wish to quickly satisfy the ATO should the ATO audit/review the approved SMSF auditors’ audit files.”
Additionally, Figot said the Tax Office recently updated its guidance regarding auditor contravention report instructions and inserted new wording.
“It now states ‘examples of contraventions that should be reported in the year they occur and not in subsequent years (unless repeated) include contraventions of section … 104A …of the SISA’.”
