Individual vs corporate SMSF trustees

The ATO urges self managed super fund (SMSF) members to ensure they understand the differences between the two types of trustees-individual and corporate.

The choice of trustee will affect the way the fund is administered and the type of benefits it is able to pay, so it is important to choose a structure that suits the SMSF’s circumstances.

A corporate trustee is a company incorporated under the law that acts as a trustee for the fund. If a member of the SMSF already owns a company, they may choose it as trustee as long as it meets the requirements.

An individual trustee structure is one which is operated by fund members who also act as trustees.

When considering both structures it is important to look at the issues that affect SMSFs:

Costs and convenience

Individual trustees, with each member acting as a trustee, can have lower establishment costs because a separate company does not have to be set up to act as a trustee.

Corporate structures are usually more expensive to set up and slightly more expensive to maintain.

Governing rules

Individual trustees must follow the rules in the fund’s trust deed and superannuation laws.

Directors of the corporate trustee must follow the rules in the fund’s trust deed, superannuation laws, as well as the company’s constitution and the Corporations Act 2001.

Administration/reporting

Individual trustees have fewer reporting obligations and, therefore, can be simpler to administer. They must also appoint an independent auditor to audit the fund’s operations each year, lodge a self-managed super fund annual return for the fund and pay an annual supervisory levy to the ATO.

Having a corporate trustee can make it easier to administer the ownership of fund assets and keep the assets of the fund separate from any personal or business assets.  In regards to reporting, corporate trustees have the same obligations as individual trustees, as well as reporting obligations to the ATO and an annual review fee to the ASIC.

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