To Record or Not to Record
The retention of key documents is an important requirement for the trustees of self-managed super funds. In this day and age, technological advances have seen the ATO update their record-keeping requirements to allow for electronic storage.
What do trustees need to know about record-keeping?
The ATO, on its website, emphasises that it is the responsibility of the trustees to maintain records of documents in such a way that they are accurate and easy to access. This includes all tax documents and records of the super fund, especially minutes of all investment decisions ensuring that all trustees have acknowledged the decision and the reasons of the choice of investment are noted. This specifically ensures that any disputes between trustees over failed investments within the fund, should not occur since trustees cannot claim they were not involved.
What are the benefits of storing SMSF records electronically?
The ATO’s decision to allow the electronic storage of documents was primarily as a way to minimise the cost of running an SMSF, since it can potentially reduce the costs of maintaining the collection of records. Additionally, a well organised collection may help reduce the cost of any audits required.
What are the negatives of storing SMSF records electronically?
There is a need to ensure that all documents stored electronically can be easily verified for authenticity and are easily accessible. In particular, unknown authenticity of documents held digitally may result in issues when lodging documents with the ATO. Keeping a copy of key documents without the originals may result in difficult questions regarding whether the original was destroyed for the reason other than to simply reduce paperwork. For this reason trustees should strongly consider whether to keep original copies of important documents. The loss of a trust deed, or the existence of one with questionable accuracy, for example, has potentially major implications in case of disputes between trustees, often requiring court decisions for solutions to be achieved.
For how long do documents need to be kept by trustees?
The ATO specifies the need to maintain various documents for various lengths of time. Should any of these documents not be available within the time period then a penalty must be paid based on penalty points.
Records required to be held for at least five years:
– Accounting records with the transactions and financial position of the SMSF (If not held, 10 penalty units must be paid)
– Annual operating statement and an annual statement of the SMSF’s financial position (10 penalty units)
– Copies of all SMSF annual returns
– Copies of other statements required to be lodged with the ATO or provided to other super funds
Records required to be held for at least ten years:
– Minutes of trustee meetings and decisions (10 penalty units)
– Changes of trustees (10 penalty units)
– Trustee declarations acknowledging the obligations and responsibilities for any trustee, or director of a corporate trustee, appointed after 30 June 2007 (10 penalty units)
– Members’ written consent to be appointed as trustees
– Copies of all reports given to members (10 penalty units)
– Documented decisions about storage of collectables and personal-use assets
Ultimately the responsibility of retaining key SMSF records falls onto the trustees. Should any doubts be predicted to exist over the authenticity of a document then care must be taken if making the decision to store SMSF records electronically.
If you’re receiving full service SMSF administration from JBS, you’ll be happy to note that we do all the recording of documents for you electronically, however we still keep a copy of the original documentation of key documents such as trust deeds, pension documentation and binding death benefit nominations. This allows easy access to documents for members, trustees, auditors, and the ATO. If you are running your own SMSF, make sure you adhere to all document storage requirements or alternatively, contact JBS to discuss how we can help.
