Rethinking Section 104A: SMSF Trustee Declarations and the Auditor’s Role

Aug, 2025

By Ron Phipps-Ellis

In recent months, SMSF auditors have been raising critical questions about the practical implications of section 104A of the Superannuation Industry (Supervision) Act 1993 (SISA)—a provision that continues to challenge both trustees and auditors alike.

At the core of the issue lies the requirement for trustees (and directors of corporate trustees) to sign and retain a Trustee Declaration, confirming their understanding of their roles and responsibilities under the SIS legislation. While the legislation has been in effect since 1 July 2007, the evolving practice of SMSF administration and auditing—alongside ongoing transitions between service providers—has resulted in many original declarations becoming unavailable.

Current Industry Practice and ATO Guidance

Historically, SMSF auditors have adopted a two-pronged approach to demonstrate compliance with s.104A:

  • Reviewing the signed trustee declarations from the year under audit;
  • Seeking confirmation from trustees regarding record retention within the Trustee Representation Letter.

However, under current ATO guidance, SMSF auditors must now sight the signed declaration and retain it on the audit file, marking a significant change in established industry practice. According to the ATO’s audit guidelines:

“You need to sight a signed trustee declaration for each person required to sign one and retain a copy of these on the audit file. You should also seek written representations from trustees that the declarations are retained in accordance with record-keeping requirements.”

The signed declaration must be kept for as long as the trustee is appointed or for at least 10 years (whichever is longer).

This has placed increased pressure on SMSF auditors—particularly when original declarations cannot be located, often due to changes in accountants, administrators, or document management systems over time.

Practical Considerations and Proposed Solutions

Our conversations with SMSF auditors indicate a growing trend: where original declarations are unavailable, a current s.104A declaration is being obtained from trustees. This approach offers several benefits:

  • It reminds trustees of their legal obligations;
  • It supports smoother transitions between providers;
  • It reflects compliance intent and good governance.
  • It enables the trustee to meet the record keeping requirements.

In support of this approach, we propose the following refinements:

  • Some ATO guidance that if the original declaration is missing or a declaration has never been signed, obtaining a new declaration will rectify a section 104A contravention. The ATO has confirmed that they will be looking to release some guidance to this effect.
  • Consideration of a more practical and effective compliance mechanism, such as an annual declaration by trustees as part of the SMSF Annual Return.

Feedback from the ATO – Kellie Grant’s Response

In response to our concerns, Kellie Grant from the ATO provided the following clarification:

“We understand that trustees may not be able to satisfy their auditor that they have met the requirements of this provision with respect to both the signing and retention of the declaration. In which case the ACR instructions state that the auditor only needs to report the contravention once ie in the year they identify the breach. However, if trustees sign a new trustee declaration, this will rectify the breach and meet the record keeping requirements going forward. The auditor can then report the contravention as one that is rectified and we are unlikely to take any action against that breach.

Looking Forward

Our view remains that s.104A is primarily aimed at educating and reminding trustees of their responsibilities, not burdening auditors with retrospective compliance hurdles. We believe that compliance and education can be better achieved by shifting away from permanent record reliance and instead, incorporating an annual trustee declaration directly within the SMSF Annual Return.

We thank the ATO for welcoming feedback and invite continued consultation with industry stakeholders to ensure practical, meaningful compliance outcomes that serve both auditors and trustees alike.

Article taken from the Auditors Institute, available here.

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