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Sent: 09-06-2010 09:42:05
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Getting Companies to EmployA How To Book Of Self Managed Super FundsEmail Marketing WorkshopsEnduring Powers of Attorney and SMSFsEmail Marketing Business Opportunity - Helen Bairstow
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Enduring Powers of Attorney and SMSFs

Click here to buy - A How To Book of SMSF's by Tony Negline
Tony Negline

In late April the ATO released their final version of a ruling on using Enduring Powers of Attorney (EPoA) in Self Managed Super Funds.

For the last few years the ATO has also released a compendium document which details the differences between the original draft and the final version of rulings.

I have always found these documents very informative because they provide details about how and why a final rulings differs from its draft.

(The following information assumes you have a working knowledge of the legal personal representative rules in SMSFs. If you need further information about this subject then please consider purchasing a copy of my book about SMSFs. Details about purchasing this book are at the bottom of this article.)

For example, the ATO make clear that it's possible to have a single trustee if there has been an EPoA granted over that individual by two or more members of the same fund.

This of course deals with individual trustees.

The situation of corporate trustees is a little more complicated and the ATO has redrafted its view from the draft.

The draft ruling says, "The appointment of the legal personal representative as a director of the corporate trustee and the resignation of the member from this position must be in accordance with the constitution (if any) of the corporate trustee, the SISA and the relevant provisions of the Corporations Act 2001 (Corporations Act)."

This has been amended to say, "A member who is a director of the corporate trustee may also appoint their legal personal representative holding an enduring power of attorney as an alternate director in their place in accordance with the corporate trustee's constitution or section 201K of the Corporations Act. If the legal personal representative is appointed as an alternate director, he or she must be so appointed in their own right and not as the member's agent. In addition, the terms of the appointment must only empower the legal personal representative to act as a director when the member is not performing those duties themselves. The member is not removed from the position of director in these circumstances."

This represents a very important change in view and potentially provides a greater degree of flexibility in using an EPoA with corporate trustees.

In the draft ruling the ATO said that an EPoA "must include an authority to act in relation to the donor's financial, business and property affairs or an authority to act in relation to the donor's superannuation affairs. Conversely, the authority cannot have an exception relating to superannuation or financial affairs."

These requirements have been removed from the final ruling and it would appear that they are no longer required.

What about the removal of a trustee or director when the member has lost mental capacity? The ATO state in their compendium document that "The way in which a trustee of a fund is replaced by the LPR in such unforseen circumstances is subject to the terms of the trust deed and relevant State or Territory trustee legislation ... The way in which a director of a corporate trustee is replaced when there is an unforseen situation that renders the director incapable of performing their duties is subject to the constitution of the corporate trustee and the Corporations Act."

The ATO reiterate that the EPoA cannot receive any remuneration for performing any duty in relation to a Self Managed Super Fund. This means that it is highly unlikely that a solicitor or accountant who provides professionals services to a fund would want to be appointed to an EPoA in relation to that fund.

What about joint holders of an EPoA? It is possible to appoint more than one EPoA if they are required to act together - never separately or severally in relation to their duties as an attorney. This means that a SMSF might have more legal personal representatives acting as trustees than it has as members.

Finally please consider purchasing a copy of my book. You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne

The second edition has just been released.

Two options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb


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This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.

 
 
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