Hello Ron
Thanks for a great question.
Whilst appreciating that the LPR of the deceased son (Son #2) might have some legitimate concerns about becoming a director of the corporate trustee, the SIS Act provides a six month period after the death of Son #2 for the LPR of the deceased to become a director of the corporate trustee (refer to section 17A(4)).
Clearly this six month period has been exhausted.
Whilst appreciating the circumstances, I conclude that as the fund auditor there is a qualification of the Part B report in relation to section 17A and a contravention to be reported in the ACR (refer to Test 1 – fund definition test).
The EPA that Son #1 has for Mother (and her subsequent resignation as director, but still being a member) is presumably fine – given section 17A(3)(b).
Clearly I do not speak on behalf of the ATO. I would hope that it is unlikely that the ATO would make a fund non-complying in these circumstances.
However, it should be explained to the executor/LPR of Son #2’s deceased estate, that by refusing to take on the directorship of the corporate trustee of the superfund, that they are potentially putting at risk the complying status of the fund and the draconian tax consequences that this might be entail.
Would be happy to hear the views of other auditors, especially those that have encountered a situation similar to this.
Best regards
The Auditors Institute