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Clare Evans

Jul 26, 2022

Corporate trustee and asset name

in SMSF Technical Forum

I am currently auditing a fund which has $3 million in Telstra shares.

The name on the shares is Corp Trustee ITF <CSF>

The CSF is only an abbreviation of the fund name, rather than the complete name.

It has also just been disclosed that the corporate trustee is also registered as a tax agent, so is not a sole purpose trustee.

I saw the prior question confirming that a corporate trustee doesn't need to be sole purpose (thank you) but figured this was still useful information given that the name is incomplete otherwise.

Would a note in the management letter suffice to suggest correction to the name, given that the corporate trustee is correct? Or is an ACR required due to the abbreviated name.

Thanks in advance for the help.

2 answers0 replies

Comments (2)

Clare Evans

Jul 26, 2022

Thank you very much. I really appreciate that. Clare

THE AUDITORS INSTITUTE

Jul 26, 2022

Hi Clare

There is no SIS regulation that stipulates exactly how investments of a SMSF should be registered. Under the trustee covenants in SIS that they must be kept separate to the trustee’s personal, business and other assets, and we can consider what the ATO considers ‘best practice’.

From the ATO website: https://www.ato.gov.au/Super/Self-managed-super-funds/Investing/Ownership-and-protection-of-assets/

"Fund assets (other than money) should be held in the name of either:

the individual trustees 'as trustees for' the fund
the corporate trustee 'as trustee for' the fund."

Some registries, especially for listed securities, may not accept registrations with the term ‘as trustee for’, and therefore it may be difficult for SMSFs to comply precisely with the ATO’s stated best practice.

Most SMSFs and their stock brokers will set up accounts with registration details XYZ Pty Ltd <XYZ Super Fund a/c> which has been accepted practice for many years.

In your example the Telstra shares are registered: Corp Trustee ITF <CSF> with CSF being an abbreviation for the SMSF name, and whilst it is not ideal arguably it is not in breach of the SIS regulations.

A note in the management letter for this example should be sufficient, either asking the trustee to change the registration name at the Telstra share registry to XYZ Pty Ltd <XYZ Super Fund a/c> or alternatively providing a ‘declaration of trust’ confirming the Telstra shares are owned by the trustee [trustee company’s full name] as trustee of the super fund [it’s full name]. On that basis there should be no requirement to lodge an ACR as there is arguably no breach of the regulations.

If other auditors have a differing view it would be great to hear.

Thanks

SMSF AAA