Minutes of Trustee decisions

The transactions involving a SMSF’s drive for accumulating wealth may result in the SMSF holding a person’s most valuable assets, often greater than their family home.

The accumulation of these assets is aided by the significant taxation concessions available to a SMSF but only if it complies with the law.

The Australian Taxation Office, as the Fund’s regulator, needs to be assured that in return for granting these concessions, the Fund is abiding by the rules with the Trustees running their Fund’s affairs using the good governance practices expected of trusteeship. The Fund’s annual audit provides this assurance.

Because a SMSF cannot talk, those relying on it, its stakeholders which includes its members as well as the ATO and the Auditor, are dependent on the records kept by the Trustees to tell them that it is compliant.

These records include the financial statements, members’ records, records of investments, assets and their values, benefit payments, taxation returns and all of the other details of transactions entered into to enable the Fund to acquire wealth and achieve its objectives. 

It also includes pro-active and effective minute keeping; minutes that reflect that Trustees really do understand their responsibilities and are pro-actively running their Fund, not simply signing off pre-prepared “packaged” minutes produced by an accounting computer system.

Written minutes are expected to record discussions, decisions and resolutions made by the trustees or corporate trustee and must be kept for at least 10 years.

Standard annual clearance minutes adopting the Financial Statements and usually prepared by the Fund’s Accountant on behalf of the Trustees are generally suitable in addition to minutes recording trustee decisions made during the year.

Examples of minutes that should be kept

In addition to the minutes establishing the Fund and communicating with the ATO, various recurring “operational” minutes should be kept. These include (not exhaustive):

• Adoption of the annual Financial Statements
• Appointment of Auditor
• Decisions to sign the Auditor’s Engagement Letter
• Adoption of Investment Strategy and any amendments
• Decisions regarding buying and selling assets
• Decisions regarding creating and maintaining pensions
• Decisions regarding paying benefits
• Agreement to issue Trustee Representation Letters to the Auditor
• Decisions to appoint an Investment Manager and to write an appointment letter accordingly (SIS s124(1)).