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SMSF paperwork – What do I need to keep & for how long?

Dec 8, 2022, 10:42 AM

By Philip La Greca
Executive Manager, SMSF Technical & Strategic Services

record keeping

In a previous blog, we discussed what decisions trustees need to document and how they need to document those decisions. This article will look at how long you'd need to keep those documents recording your trustee decisions. We will also examine what other documents need to be saved and, most importantly, for how long.
When we look at documents, SIS legislation does specify trustee obligations to keep specific records. In fact, not only does SIS specify what documents are to be kept, but it also puts minimum retention timeframes on these obligations. These obligations include record-keeping for accounting purposes covering not just the existing accounts and financial statements but also the supporting records, which need to be maintained for at least five years and located in Australia.
All trustee minutes are also required to be kept for at least ten years, so this obligation covers those decisions we discussed in the previous article. Additionally, to be retained for this time-period are all the records that relate to trustee changes, such as deeds of retirement & appointment of trustees, consents to act as a trustee, trustee statements about disqualified person status and ATO trustee declarations also need to be retained.
The final SIS obligation covers the retention of member reports for at least ten years, which covers members' annual statements and other communication given to the members by the trustees, such as pension commencement information and benefit payment information.
As part of the annual audit statement, the sections of the SIS Act covering these obligations are specified. The auditor investigates this and signs off when these obligations are met.
It is important to note that these SIS record-keeping obligations are an operating standard and are subject to an administrative fine of 10 penalty units. From January 2023, each penalty unit will be worth $275, so failure to keep these records could result in a fine of $2,750.
Of course, just like any other taxpayer, an SMSF has tax record retention obligations as well, and that requires records to be kept for at least five years. Now, these records do overlap to an extent with the accounting records that need to be kept for your SIS obligations, but it does extend beyond just the accounting records to include things like income statement summaries and receipts that are the supporting documents, not just the financial transactions.
Finally, there is a whole range of other documents that the trustees should retain that are not specifically covered by these record-keeping obligations. Some of these documents relate to the actual structure of the SMSF, such as the trust deed and subsequent amendments, as well as the company constitution if there is a corporate trustee for the SMSF. Now while you might think that there is no question that you must keep these documents, it is remarkable how often it is challenging to locate the actual executed deed of the SMSF.
Other key documents that should be retained include bare trust deeds, loan agreements, purchase contracts and leases that relate to any limited recourse borrowing arrangement put in place by the SMSF.
The final group of documents to consider for retention would be member instructions. This will cover elements such as members' requests to receive benefits where trustees would need to have member declarations and evidence of the condition of release being met and documents such as member death benefit nominations call mom. These nominations are crucial for SMSFs that do not incorporate nomination information on their annual member statements, as they should provide instructions about how to deal with death benefits in the future.

So while obviously, the SIS obligations are a key part of funds record keeping and retention processes, other elements exist in terms of ensuring that the SMSF has all the paperwork that allows it to operate and make future determinations.

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