During the Establishment process for your Self-Managed Superannuation Fund (SMSF), the first thing you need to think about is the structure. You will have a choice between having a company as Trustee of the SMSF or you can consider Individual Trustees.
Both SMSF structures have benefits and risks associated with them.
What is an SMSF Trustee?
An SMSF Trustee is responsible for managing and overseeing the operations of the SMSF, ensuring that it complies with all legal and regulatory requirements. The role of the trustee is crucial as they hold a fiduciary duty to act in the best interests of all the SMSF members and to manage the SMSF for the sole purpose of providing retirement benefits.
An SMSF Trustee is responsible for:
Annual Financials Statements,
SMSF Annual Return
Auditing requirements
Record keeping
All members of the SMSF must be individual trustees or directors of the corporate trustee, so make sure they're eligible.
What is a corporate Trustee?
Choosing a Corporate Trustee means that a company must be created to act as the trustee of the SMSF. Except in limited circumstances, all SMSF members must be a director of this company, which must be registered with the Australian Securities and Investments Commission (ASIC).
A company cannot act as a corporate trustee of an SMSF if:
the company is aware or has reasonable grounds to suspect that a person who is, or is acting as, a responsible officer of the company is a disqualified person
an administrator has been appointed in respect of the company
the company has been deregistered by Australian Securities and Investments Commission (ASIC)
a receiver, or a receiver and manager, has been appointed in respect of property beneficially owned by the company
a provisional liquidator or restructuring practitioner in respect of the company has been appointed
action has started to wind up the company.
When you have a company as SMSF Trustee, ownership of all the SMSF’s assets is listed in the company’s name as the trustee. For Example, this would look like – Doyle SMSF Pty Ltd ATF Doyle Family SMSF.
What are Individual Trustees?
No additional entities need to be created if you choose the Individual Trustee structure to own and manage your SMSF assets. Since there is no separate legal entity in place it is important that Individual Trustees keep their personal assets separate from those of the SMSF.
Individuals are eligible to be SMSF trustees provided they are not a disqualified person.
When you have individuals as SMSF Trustee, ownership of all the SMSF’s assets is listed in the Individual Trustees name as the trustee. For Example, this would look like – Jim Doyle and Mary Doyle ATF Doyle Family SMSF.
Under this structure, all members of the SMSF must also be Trustees of the SMSF. An SMSF cannot have only one Individual Trustee, so if you only have one member, you will need to appoint somebody that is not an SMSF member as an additional Individual Trustee and they will be making decisions about your SMSF money with you.
Under both of the above structures, Trustees cannot be paid for their services.
There are a number of things to consider when deciding on the structure of your SMSF. These things including costs, relationship of members, succession planning and minimising liability.
Most SMSF Accountants/Administrators will recommend a newly incorporated special purpose company structure as it minimises potential risks, makes separating personal and SMSF assets simpler and the process of removing and adding members is easier.
At Lifetime SMSF we can assist you with the establishment of your SMSF Structure. Speak to one of the team today.
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