On September 25th, Daniel Butler and Cassandra Hurley from DBA Lawyers (DBA) shared some valuable insights with the team at DFK Benjamin King Money, covering a range of important SMSF topics.
Two key issues we’d like to highlight are what to do if you lose a trust deed and the recent discussions around Division 296 legislation.
Lost Trust Deeds
One of the primary responsibilities of a trustee is to ensure the SMSF operates according to the governing rules outlined in the trust deed. However, if the deed is misplaced or lost, it can lead to unintended complications.
Without a trust deed, trustees may face challenges from beneficiaries regarding how final death benefits are distributed or whether the Fund is being managed according to the original rules. This situation can become costly for trustees if the challenge is taken to court, but it’s easily avoidable by keeping the original trust deed and any variations in a safe, accessible location.
DBA has emphasised that merely having a scanned copy of the trust deed is not always sufficient. If it has been lost, trustees should explore all possible avenues to locate it, as this can significantly improve their chances of a favourable court ruling, as demonstrated in the case of Wilmington Investments Pty Ltd v Sarich [2023].
Division 296 Tax
From July 1, 2025, the Labor government plans to introduce Division 296 tax, which will impose a 15% tax on the year-on-year growth of superannuation balances exceeding $3 million. It’s crucial for clients with balances over this threshold to model their options, helping them determine whether it’s better to keep their monies within the superannuation environment or move them outside. Understanding the consequences of each choice will enable informed decisions based on individual circumstances.
Modelling provided by DBA suggests that the effective tax rate for investments made within superannuation—whether in full accumulation phase or partly segregated—will still be lower than if those investments are made outside the superannuation system.
As for the current status of this legislation, it has passed the lower house without amendments and is now under consideration by the Senate. Many organisations, including the SMSF Association, are voicing their concerns over the bill due to its potential unintended consequences on the taxation of unrealised capital gains, and the lack of indexation for the $3 million limit.
Talk to us about your SMSF concerns
If you have any questions, feel free to reach out to a member of the DFK Benjamin King Money team. We’re here to help with any queries you may have. We’d like to extend our gratitude to Dan and Cassandra from DBA Lawyers for their informative presentation. We look forward to strengthening our professional relationship in the future!