Power of Attorney (POA)

For some Trustees who are going overseas but would still like to  manage an SMSF in Australia, they can give someone the Power of Attorney (POA).

Firstly, Trustees need to ensure that they definitely do not satisfy the residency requirements set up by the Tax Office. If Trustees do satisfy the requirements, a POA is not required. If Trustees do not satisfy the residency requirements, they can appoint a POA by following the steps below:

  • Elect someone who is a resident of Australia to be appointed as a POA
  • The elected individual will need to complete a Trust Deed addendum/Minutes of Meeting, Consent to act as Trustee/Director and a Trustee Declaration.
  • If the Fund has a Corporate Trustee, the Directors of the Corporate Trustee will need to inform ASIC of the change. The POA will need to be added into the Fund as an Alternate Director
  • Inform the Tax Office of the appointment of the POA.

For more information on the Tax Office’s requirement when appointing POA, please see the link below:

If you are a client of ours and you elect to implement a POA, we will send you the above mentioned documents to be signed and we will update the appointment of the POA with ASIC and the Tax Office on your behalf.

Enduring Power of Attorney (EPA)

An Enduring Power of Attorney (EPA) is an important legal document that ensures if you loose your mental capacity through injury or the onset of a medical condition then you have someone in a position of trust to protect your assets and to take care of your affairs.

An EPA is especially important if you are a Member of an SMSF. Generally, if you are a Member of an SMSF, you must also be a Trustee (or a Director of a Corporate Trustee). Where a Trustee loses mental capacity, then the position of the Trustee may become vacant. As a result, the SMSF may risk becoming non-compliant by the ATO unless the Trustee either rolls over the incapacitated Member’s benefit to a retail fund or appoint for a new Trustee. Rolling over the Member’s balance into a retail superfund can have tax consequences (such as CGT and Stamp Duty) and can also lead to practical difficulties – for instance, the assets held within the SMSF may need to be sold and liquefied in order to transfer the benefits to a retail fund.

However, if the Member has appointed an Enduring Power of Attorney, a person holding an EPA is authorised to act in the Member’s place as a Trustee. As long as the replacement Trustee is appointed within 6 months of the incapacitated member ceasing to be a Trustee, the Member balance can remain within the SMSF.

EPA Download Form

For general information on the rules over SMSF’s please visit the ATO guidance page.

  • Mits

    Hello,

    We’d want to set-up a corporate trustee but first have to find someone who can be alternate director with our enduring PoA while we are outside Australia.

    Are you able to take on the alternate director role with our enduring PoA if we set up the Corporate Trustee entity.

    Any suggestion or direction will be most useful

    Thanks for your assistance

    • superannuationwarehouse

      Mits,

      The role of the Power of Attorney is to make financial decisions on behalf of the Trustees for the Fund. When Trustees are overseas, this may be a strategy used to ensure residency remains in Australia.

      Most Funds use a family member or close friend to fulfill the POA duties. We can perform this function, but the preference would be for you to appoint a POA.

      Please note that we do not provide any financial advice and therefore its important for you to give clear direction and instructions on how to operate the Fund at the time of appointing the POA, if we were to be appointed.

      Conclusion – we are happy to assist you where possible to manage the Fund under your instruction.

      • Mits

        Thanks Hein,

        How do we take this forward..Should I call you to discuss next steps ?

        Cheers

        • superannuationwarehouse

          Mits,

          Happy to discuss, just call on the numbers below.

          When you are ready to set up an SMSF, you can do it online here:

          http://www.smsfwarehouse.com.au/smsf-setup/

          Thanks

          Regards – Hein Preller – Director

          P 03 85553238 M 0411241215
          E admin@superannuationwarehouse:disqus .com.au

  • Alfred Lam

    Hi, i would like to ask a question regarding commencing an accumulation fund to a pension fund for a no longer Australian resident but has given someone the power of attorney to manage the fund. My question is, does the tax treatment the same as any other pension fund (ie: tax free @ 60yrs old) or there is a different tax treatment due to the member is not a resident.

    • superannuationwarehouse

      Alfred,

      Just make sure the SMSF remains a resident Fund. The same rules for pensions would apply whether the Members are in Australia or overseas on a temporary basis.

      As the Member you can apply to the Trustee to start a pension. The Trustee may then approve and execute the start of the pension. You can download a template for the pension commencement here:
      http://www.smsfwarehouse.com.au/pensions-in-smsf/

      Keep well,

      • Alfred Lam

        Hi,
        Just to clarify, first of all yes, the fund is a complying fund so no issue with that. One of the member in the fund who is not an Australian resident (61 years old) lives in overseas permanently would like to start a pension in the fund and withdraw money out as pension payment. Does the pension withdrawal tax free even though the member is not an Australian resident?
        Thanks a lot for your help, appreciate that.

        • superannuationwarehouse

          Alfred,
          Taking out a pension from the SMSF does not have to be disclosed in your personal tax return and is also not taxed as far as Australia goes. The big advantage of a pension, its like a tax-free haven.
          Obviously I don’t know the tax rules in the country the Member lives in now, but all good from here.
          Lastly, a general guide on pensions from the ATO can be found here in a pension booklet from the ATO underpoint 7:
          http://www.smsfwarehouse.com.au/smsf-guide/
          Keep well,
          Hein

  • Shaun Fernon

    Message Body:
    1. With the trust deed is it possible to appoint power of attorney if I travel for extended amount of time?
    My sister for me and my wife’s brother to stay compliant?

    2. Temporary incapacitated? Document needed to use this
    Access? Doctors Certificate & proof of income before T.I.?
    I believe you can great a taxable income from contributions made above the
    Minimum employer contributions?

    3. Will your prices change in the future?

    • superannuationwarehouse

      Shaun,

      I can answer your questions as follows:

      1. For an SMSF to be taxed at the concessional rate of 15%, one of the rules to be complied with is residency requirements. This means the central management and control of the Fund must be within Australia. If you travel and your absence from Australia is of a temporary nature, generally less than a 2 year’s leave from Australia, the Fund will be considered resident. If you break this 2 year rule, you can consider a POA while still in Australia to ensure SMSF residency requirements are met. You can download this form from the page above.

      2. Temporary incapacity is defined in the SISR section 6.01(2) as: “Temporary incapacity, in relation to a member who has ceased to be gainfully employed (including a member who has ceased temporarily to receive any gain or reward under a continuing arrangement for the member to be gainfully employed), means ill-health (whether physical or mental) that caused the member to cease to be gainfully employed but does not constitute permanent incapacity.”

      You can download or view the legislation here:
      https://www.smsfwarehouse.com.au/legislation-and-rules/

      To claim from insurance for temporary incapacity, see your SMSF insurer’s T&C’s. We give insurance options here:
      https://www.smsfwarehouse.com.au/smsf-insurance/

      To access your super, make sure you meet a condition of release:
      https://www.smsfwarehouse.com.au/pensions-in-smsf/conditions-of-release/

      3. The fees we charge have mainly been consistent over the past few years and we will strive to remain competitive in the market going forward.

      Trust this gives you the guidance needed.

  • Mr Cleaner

    Hi, great site. A question regarding EPOA. My wife and I have moved to NZ for me to take up a consulting role. I have signed a contract for one year, but we are thinking of staying indefinitely (I am 52 she 51). My mother is living in Australia, and I am thinking of appointing her with EPOA to manage the SMSF. Will this meet the compliance requirements ? IS there anything else I should be doing ? Thanks so much.

    • https://www.smsfwarehouse.com.au Superannuation Warehouse

      Mr Cleaner,

      If your absence from Australia is on a temporary basis, no need to appoint a POA. However, if you want to stay indefinitely, ensure the central management and control of the Fund reamins in Australia. This will ensure compliance with residency requirements.

      Another option can be to close your SMSF and move the money to an industry super fund.

      Within an SMSF, having a Corporate Trustee can make the POA process easier as you can appoint alternative directors. The bank accounts and investment names will remain the same, being in the name of the Corporate Trustee of the SMSF.

      Keep well,

      • Mr Cleaner

        Hi, thanks for your reply. Can you provide more detail regarding a Corporate Trustee ? What does this role do, and how would one be arranged ? thanks

  • Rose P

    Hi

    My husband is planning to retire in a year. He has got a business and SMSF. On retirement we are planning to move overseas as my parents are getting older and they need to be taken care. My husbands SMSF owns the business building which my husband is planning to lease when retires. My husband also owns a rental property in his name from which he is planning to receive income on retirement.

    We would like his retirement income to be taxed at concessional rate. The trustee of his fund is a company in Australia. How can his fund meet the residency requirement to be taxed at a lower rate?

    Thanks

    ————————————–
    This mail is sent via Contact Us form on Super http://www.superannuationwarehouse.com

    • https://www.smsfwarehouse.com.au Superannuation Warehouse

      Rose,

      For an SMSF to be taxed at the concessional rate of 15%, or the rate of NIL when in pension, Trustees need to ensure the central management and control of the Fund remains in Australia.

      Using an POA may be an option you can consider. For ATO specific advice, you can note your circumstances in a private ruling from the ATO. We charge a fee of $280 to get this from the ATO:
      https://www.smsfwarehouse.com.au/running-smsf/ato-specific-advice/

      Trust this gives you the guidance needed.

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Superannuation Warehouse is an accounting firm and do not provide financial advice. All information provided has been prepared without taking into account any of the Trustees’ objectives, financial situation or needs. Because of that, Trustees are advised to consider their own circumstances before engaging our services.