While the electronic execution of documents has some obvious benefits, it is important that SMSF professionals and clients pay close attention to the procedures involved to avoid legal disputes down the line.
SMSF Adviser Technical Strategy Masterclass Day 1 was a huge success
On Day 1 of the SMSF Adviser Technical Strategy Masterclass, Heffron managing director Meg Heffron outlined how indexation and legislative measures may impact contribution and pension strategies and some of the considerations for clients with this.
Smarter SMSF chief executive Aaron Dunn then provided an update on the current state of play for electronic execution of documents and some of the evidence and documentation requirements in the current environment.
After making an announcement in the budget in early October, the Treasury released an exposure draft to make permanent changes to the current temporary instrument applying to section 127 of the Corporations Act.
In his session, Mr Dunn explained that the instrument will allow for the execution by counterpart of documents in physical form or by using an electronic communication.
Mr Dunn noted that there are some clear benefits in terms of efficiency for SMSF practitioners with electronic documents.
“There are clearly some cost savings, including the fact you don’t have to print out multiple copies, and quite clearly, documents such as trust deeds and other documents are quite lengthy in terms of pages,” Mr Dunn said.
He also pointed out some of the security benefits with technologies such as DocuSign have very strong security features that sit within the software to verify who the individual is and, most importantly, the individual and the audit trail that sits behind that electronic execution.
“Then finally, there is a clear level of greater reliability because we’re not going to potentially have the issue of documents being printed or archived and wondering where they are, clients losing them and the like,” Mr Dunn said.
“If we are using an electronic system with electronic storage, even automated deed services and so forth, that sort of tool allows for the ongoing use of a solution that provides a reliable outcome not only for the client but adviser.”
On the flipside, Mr Dunn said there are, of course, some limitations.
“The concern is that there is not a lot of guidance or testing that’s been undertaken by the courts. Of course, the changes here are looking to help overcome what some of those challenges might be where the documents would need to be wet ink, but the execution, form and substance and the way in which those documents need to be signed is absolutely critical here,” he stressed.
“So, the procedure is still going to be important because, as we have seen over the past few years, there will continue to be death benefit disputes. The courts are quite clearly looking at the level of documents and the trail that those documents provide in respect to decisions as to whether a document is valid or not, and therefore, whether the documents that are linked off that operative deed are in effect or not as well.”
Mr Dunn said there are also some practical hurdles when dealing with different providers.
“Product providers, banks, brokers and the like all have to get sign-off internally to accept these sorts of things as well,” he stated.
“You’ve only got to think about compliance departments, and I’ve come across this myself in the past six months in terms of signing documents electronically and then having them returned to say that they are not acceptable in that form because their processes and procedures haven’t been updated to reflect the change that has been introduced here.”
Day 1 of the conference also saw Dharam Singh of D P Singh & Associates win the $500 prize, sponsored by Act2 Solutions.
More than 1,500 SMSF professionals have now registered for the SMSF Adviser Technical Strategy Masterclass.
The agenda for Day 2
Day 2 of the SMSF Adviser virtual masterclass event will kick off with SuperConcepts’ Nicholas Ali, who will identify some of the risk areas with non-arm’s length income and non-arm’s length expenditure.
Cooper Grace Ward partners Scott Hay-Bartlem and Clinton Jackson will provide an update on recent guidance and regulatory changes in the SMSF property and loans space and steps for ensuring clients are covered by the various COVID-19 relief measures.
ATO assistant commissioner Justin Micale will outline emerging compliance concerns and focus areas for the ATO for the 2020-21 income year and beyond.
In a Q&A, Aquila Super partner Chis Levy will discuss some practical strategies for minimising the disruption of APES 110.
“Aquila Super is delighted to be involved with the SMSF Adviser Technical Strategy Masterclass, and look forward to hosting our session on how accounting practices can minimise the disruption of the updated APES 110 independence standards,” Mr Levy said.
A quick word from Principal Partner Lonsdale
Principal Partner of the SMSF Adviser Technical Strategy Masterclass, Lonsdale Financial Group has been working with accountants to build their aligned financial planning businesses for over 30 years.
“Our experience in this area means we understand what it takes for accounting practices to establish and execute their financial planning and strategic advice businesses, giving them the tools and resources they need for long-term growth and success,” said Lonsdale chief executive Helen Blackford.
“Lonsdale is very pleased to be partnering with the SMSF Technical Strategy Masterclass to deliver high-level, specialist content to SMSF professionals, particularly during this period of significant change.”