Accountants risk being sued by clients who lose money as a result of failing to update self-managed suerannuation fund (SMSF) deeds, according to Peter Townsend, the director of superannuation law advisers Super Central.
Townsend said accountants were legally responsible for ensuring their clients' SMSF trust deeds were kept up-to-date with current law. "You can't do something allowed under new legislation if the trust deed is not also updated," he said.
Such actions include taking advantage of transition-to-retirement legislation or simplified pension rules.
If the fund did something the deed did not allow, the action might have to be reversed - resulting in tax implications, Townsend said.
"If for instance there is no authority in the governing rules to pay the new transition-to-retirement pension, the trustee can't do so, even if the legislation allows for it," he said.
"The potential financial downside to clients is enormous."
Ignorance on the part of the accountant was no protection in the case of an audit, he said. The tax office has made it clear it intends to put all SMSFs under close scrutiny after June 2007.
"Accountants who fail to ensure their clients deeds are up-to-date are potentially guilty of negligence and the loss of their clients' money," he said.
With superannuation legislation constantly changing, accountants needed to up-date their clients' SMSF trust deeds regularly, he said.
