Superannuation

Reader’s question: My wife and I are trustees of my do-it-yourself super fund. All bank accounts, term deposits and share investments in the fund are in my name only as trustee of the fund.

My accountant has advised that the names of both trustees should appear on all these items. Is this correct? If it is, then it may come as a surprise to many trustees.

If it is necessary, what is the easiest way of doing it?

Your accountant is correct. The naming convention for all assets purchased by a DIY fund, says Rachael Nicholson, is “Joe Bloggs as trustee for [the super fund name]”

This is because the Superannuation Industry Supervision Act requires money and other assets held in a DIY fund to be kept separate from assets you own personally. This ensures retirement benefits of members are protected.

Exposed position

If assets are not held correctly, they may be exposed to creditors if trustees experience financial difficulty. The consequence of not identifying assets correctly is that your fund auditor may be required to notify the Australian Taxation Office of this by lodging an auditor contravention report.

Changing your bank account names should be a relatively simple process for a deposit account. Typically a letter to the bank with a copy of your trust deed to show the correct name should suffice, although the bank may also ask for a statutory declaration.

Changes to cash management trusts are not as easy, given they need to go through the Office of State Revenue and a small stamp duty fee may be payable.

If you have short-dated term deposits of three to six months you can adjust them when the term expires. For longer-dated terms you will need to contact the provider to determine what is required.

Shares are tricky

Share investments can involve a more complicated process. For shares held on a holder identification number (HIN), it is likely you will be required to open a new account and complete “off-market” or “in-specie” transfers to the new account. This requirement will depend on the provider who is sponsoring your HIN and will come at a cost.

For shares held on individual security holder reference numbers (SRN), individual transfer applications will need to be made to the share registries in which they are held and again will come at a cost per share.

Golden rule

It is important you liaise with your accountant to ensure the transfers are not recorded as a change of ownership as this may create a capital gains tax liability.