Available Options for Setting Up A SMSF

The next step in setting up a self managed super fund is to decide between that of an individual trustee or a corporate trustee. Issues such as simplicity, cost, annual fund administration, compliance and subsequent changes to fund structure (if any) are factors that need to be considered. Our clients have a wealth of information and toolkits to help them decide on the most appropriate structure.

Individual Trustees

A self managed superannuation can have a minimum of one member and no more than 4 members. For a single member fund, the member must be a trustee, and also elect for another person to become a second trustee. The second trustee can be any person, but cannot be the employer of the member. For multiple member funds i.e. 2 – 4 members, every member must be a trustee and every trustee must also be a member. Members of the fund cannot be employees of another member, unless they are related. If you wish to commence setting up a SMSF online with individual trustees, please select from one of the following:

Corporate Trustee

Under a corporate trustee structure, a company is incorporated for the sole purpose of acting as trustee of the self managed superannuation fund. Self managed super funds can have a minimum of 1 member and a maximum of four members. For a single member fund, the single member can be the sole director of the corporate trustee. For a multiple member fund i.e. 2 – 4 members, every member of the fund must be a director, and every director must be a member.

If a corporate trustee is most appropriate for your self managed superannuation, then the Company must be incorporated first – to obtain an Australian Company Number (ACN) – before establishing the fund. SATO SMSF Administration® can streamline this additional procedure on your behalf, by incorporating and registering the corporate trustee for a fee of $990 (incl. GST). Click here to find out more about our company incorporation service and other related services.

To assist clients to make an informed decision, a table is provided below outlining the advantages and disadvantages under each structure.

Individual Trustees

Commence Individual Trustees Fund Establishment

Corporate Trustee

Commence Corporate Trustee Fund Establishment

Compare the Difference

Establishment Cost
  • $330 (GST Incl.)
  • $990 (GST Incl.) Company needs to be established first; then
  • $330 (GST. Incl.) SMSF establishment.
Single member funds
  • Possible to have single member fund, but must appoint a second trustee
  • Single member can also be sole director;
  • No requirement to appoint second director.
Annual Compliance Trustees must observe:

  • Superannuation trust deed; &
  • Super legislation
Directors of corporate trustee must observe:

  • Superannuation trust deed
  • Super legislation
  • Company constitution; &
  • Corporations Act 2001

Annual Administration & Ongoing Reporting

Annual administration
  • Less onerous reporting obligation for super fund; &
  • Changes in trustee structure incurs administrative cost

 

  • Easier to prove ownership of superannuation investments; &
  • Separation of fund assets from personal & business assets
Reporting obligation
  • Must lodge annual accounts and fund tax return to Australian Taxation Office (ATO)
  • Must lodge financial statements  & fund tax return to Australian Taxation Office (ATO); &
  • Australian Securities & Investment Commission (ASIC)

Changes to trustees and members

Administration of fund assets
  • Fund investments should be held in the name of all individual trustees as trustees for the fund. For example “John Citizen & Jane Citizen ATF the Citizen Super Fund”. ATF is an acronym for As Trustee For; &
  • If one of the trustees leaves the fund or dies, then the ATO needs to be notified as well as the relevant registry. For example share registries.
  • Fund investments should be held in the name of the corporate trustee. For example “Citizen Pty Ltd ATF for the J&J Citizen Super Fund”; &
  • If one of the director leaves the corporate trustee, the title on all the fund investments document remain the same. The legal owner of fund assets is the corporate trustee, not the directors.
Single member funds
  • If one trustee was to leave the fund, then a second trustee must be nominated for the fund to remain eligible for tax concession as a self-managed super fund.
  • If corporate trustee has two directors, and one leaves there is no requirement to appoint a second director. Corporate trustee can operate under single directorship.
 accounting & reporting
  • ATO must be notified of changes in trustees or members within 28 days.
Commence Individual Trustees Fund Establishment
  • Any changes to trustees or members must be reported to ATO/ASIC within 28 days.
Commence Corporate Trustee Fund Establishment

 Trustee Eligibility

The general rule is all members have to be trustees and all trustees have to be members. That is anyone of voting age (being 18 years or over) and not under a legal disability can act in the capacity of trusteeship, unless they are a disqualified person. A disqualified person is defined as a person who:

Has been convicted of dishonest conduct; or
Has received a civil penalty order; or
Is under insolvency administration; or
Is an un-discharged bankrupt; or
Has been disqualified by other governing bodies (e.g. ATO, APRA or ASIC).

Another issue that needs to be considered is the residency status of a fund. The fund being established must meet the definition of an “Australian superannuation fund”, in order to be a complying fund and enjoy tax concessional benefits. For more information about Australian residency status, a legal disability, or a disqualified person, please contact the ATO on 13 10 20, or your legal advisor for assistance. Trustees must not receive any remuneration while acting in bona fide for the members of the fund.

 

 

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