There are two ways you can set up your SMSF:
Please note: By clicking on the below image, you will be transported to the ATO’s website, where you will need to scroll down the page to watch the video.
- Individual trustees
For example: John Brown and Jane Brown as trustee for the J & J Brown Super Fund.
It is important to seek advice to understand if your SMSF is impacted or whether it is beneficial to restructure to a corporate trustee.
- A corporate trustee
For example: John and Jane Super Pty Ltd as trustee for the J & J Super Fund.
The option you choose will impact on a number of elements:
- Member and trustee requirements
- Cost of running the fund
- The name/s that appear on the title documents of the fund assets
- Separation of assets
- Who has to pay any penalties
- What happens if a trustee is unable to continue as a trustee (death or incapacity)
|
Individual Trustees |
Corporate Trustee |
|
|
Trustee requirements |
|
|
|
Administration |
More administrative impact if a member / trustee leaves the fund, dies or loses legal capacity, as all ownership documents must be amended to reflect the new trustee composition. |
Less administrative impact if a member / trustee leaves the fund, dies or loses legal capacity, as ownership documents remain unchanged. |
|
Cost |
No additional cost. |
Costs involved in establishing a company for the corporate trustee, with annual fee payable to ASIC. |
|
Trustee penalties |
Penalties for breaching the super laws are levied on each trustee. For example, if an SMSF had three trustees, three penalties are incurred (one per trustee). |
Only one penalty is levied on the corporate trustee for breaching the super laws. The directors need to fund the payment of the penalty as it cannot be paid out of the SMSF’s assets. |
Single Member SMSFs
A self-managed superannuation fund may have only one member if it satisfies certain basic conditions.
An individual cannot be both the sole trustee and sole beneficiary of a trust as the interest’s merge and there is no trust.
The SIS Act addresses this by allowing an SMSF to have a single member if the member is one of two individual trustees or a director of a company (corporate) trustee of the fund.
The most common arrangements are:
- Two trustees – one is the member and the other is a relative of the member or can be another person provided they are not an employer of the member.
- The company acting as the trustee – where the member is the sole director of the company, or the member is one of only two directors of the company, and the member and the other director are relatives or another person and that person is not an employee of the member.
Children under 18
A child under the age of 18 can be a member of an SMSF. The parent, guardian or legal personal representative, who is a trustee of the SMSF acts as their representative.