Below, we clarify when electronic signing can be done, the practical implications of doing so, and when it is best to pull out the pen and go analogue.
Are digital signatures valid?
Like all things SMSF, the answer is it depends. Most documentation regarding SMSFs can be signed electronically. The Electronic Transactions Act 1999 established that a transaction is not invalid because it took place by means of electronic communication. This act contains specific provisions stating that the signing of certain documents can be satisfied by electronic means, subject to certain minimum criteria being satisfied. Furthermore, section 10 of the act allows electronic signatures to be used for financial statements and other documents.
Will the ATO accept electronic signatures?
Yes, the ATO allows the use of electronic signatures for lodging tax documents (income tax returns, activity statements, and the like). However, a crucial document in determining whether electronic signatures are acceptable is the fund’s trust deed.
The ATO provided a frequently asked questions page due to the impacts of the COVID-19 lockdowns, which, whilst some time ago now, still hold today.
In answering a hypothetical question about meeting signature requirements, the ATO (in relation to digital signatures), said that digital signatures should be provided using a secure system, typically through an established third-party provider and in a way that clearly identifies the trustee signing and indicates the approval being provided.
It then goes on to mention that a secure system would include a system that requires a personal identification number, access code, or password to use. This would be achieved by popular e-signing platforms like Accenture or DocuSign.
What about remote witnessing of signatures?
Again, we first need to see what the fund’s governing rules say on the matter. The process can seem a bit cumbersome at first, but it is a new way of doing things, so it is really a matter of adjusting to the Brave New World.
Regarding remote witnessing, an audiovisual link will be required, and the witness must see the signing of the document. This can be achieved by screen sharing on Teams or Zoom, or some other video conferencing and collaboration application used for online meetings and communication.
The conference call also needs to be recorded and saved along with the electronic documents, as the recording is the witnessing of the signature.
Issues for consideration
Whilst e-signatures and remote witnessing are the way of the future, it is not without risk or quirks.
Firstly, the storage of electronic data needs to be secure, like any file. Video files tend to be quite large, so over time, storage space needs to be contemplated. Having said that, cloud storage should accommodate the business requirements. As a subset of that, recovery mechanisms need to be robust in case of hacking or loss.
Secondly, not every organisation in SMSF Land is au fait with e-signing and remote witnessing. Financial institutions (read Banks) tend to err on the side of conservatism when it comes to documents such as trust deeds, so if an SMSF is looking to enter a limited recourse borrowing arrangement (LRBA), one must consider the lender’s requirements.
Finally, certain documents cannot be signed electronically and witnessed remotely. The Consent to Act as a Trustee cannot be electronically signed, as the Superannuation Industry (Supervision) laws were exempted from the Electronic Transactions Act 1999, and section 201D of the Corporations Act 2001 requires a signed consent to act as a director.
Also, the ATO Trustee Declaration cannot be signed electronically or witnessed remotely by virtue of s104A of the SIS Act 1993.
It is important to remember this, as not signing the Trustee Declaration within 21 days of becoming a trustee as not doing so could become a reportable breach to the ATO.
Can company documents be signed electronically?
The pandemic was the genesis for the Corporations Amendment (Meetings and Documents) Act 2022, allowing companies to do the following:
- Hold hybrid (in-person and remote) meetings.
- Use technology to execute, sign, and share company and meeting-related documents, including deeds.
Then, in September 2023, the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023 was passed, which amended the Corporations Act 2001 to enable all documents in the act to be signed electronically and certain documents to be sent either in electronic or hard copy form.
And effective 1 April 2025, ASIC varied its Electronic Lodgement Protocol (ELP) to allow electronic signatures on the Form 362 Notification by a company to nominate or cease a registered agent or contact address.
Conclusion
The future of electronic signatures and remote witnessing in the SMSF space is expected to see increased adoption, driven by advancements in technology and the growing demand for efficiency and convenience. As regulations evolve, electronic signatures and remote witnessing will become more standardised and widely accepted, making it easier for individuals to execute legal documents from anywhere in the world.
