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Industry Group Solutions. Specialised Solutions. Topdocs Document Portal. Topdocs Integration. Topdocs Legal Pty Ltd. Legal Assurance Legal Advice. Whilst establishing your SMSFs with individuals acting as trustees may save a few dollars in the short term, the benefits of registering a corporate trustee for your new SMSF can far outweigh the short term savings. Reason 1 — Succession upon death A company is an indefinitely continuing entity.
Reason 2 — Trustee litigation exposure Another important reason to have a corporate trustee is litigation exposure. This generally ensures litigation against the Fund is limited: firstly, to the assets held in the SMSF; and secondly, to the assets held in the name of the company itself.
Reason 3 — Administrative Efficiency One of the key benefits of an SMSF is its fluidity - such as allowing multiple generations of a family to come and go from the Fund. Instances of changes in membership to an SMSF may include: Parents admitting their children into the Fund; The marriage of an existing member of the SMSF to a non-member of the Fund; The divorce of members within the Fund; Upon the incapacity of a member of the Fund, where their Legal Personal Representative is appointed as a trustee of the SMSF in that members stead; or Upon the death of a member of the Fund, where their Legal Personal Representative is appointed until the death benefits have been paid.
Section 19 of the SIS Act is very specific in its determination of what constitutes a regulated SMSF, effectively stating that the trustee must either be: a constitutional corporation; or the purpose of the Fund must be to pay a pension or pensions. The examples indicate that: with individual trustees, each trustee would be liable for the 10 unit penalty; whereas with a corporate trustee, the 10 unit penalty would be applied once only i. Therefore, after overcoming the initial registration costs, the ongoing costs are minimal.
Tweet it to your followers! See "Other contributions" clause row above which enables all other forms of allowable contributions. Rollovers and transfers in? Part L Trustees' Power to Receive Transfer The trustee may take over, or acquire by transfer, from an 'approved benefit arrangement' which includes another super fund : any part of the assets of that arrangement that represents the interest of a participant in that arrangement; if that participant has become, or is to become, a member or beneficiary of the fund.
Government co-contributions? Part D Other Contributions With the consent of the trustee and the member, any other person - including any State, Territory or Federal government — may make contributions to the fund in respect of that member. Contribution splitting to a spouse Part D Contributions-Split Requests" Member may ask the trustee that contributions made to the fund in respect of that member in the previous financial year be: transferred to the member's spouse; or transferred to the trustee of an approved benefit arrangement of which that member's spouse has joined or is eligible to join.
Contributions by members who are under 65 and not working? Part D Member to keep Trustee Informed No, but member must tell the trustee as soon as practicable if they are aged 65 or older and cease gainful employment. Contributions by members who are working part-time and are over 65 and under 75? Mandated contributions to be accepted at any age? Contribution splitting arrangements pursuant to family law matters? Part D Other Contributions How Contributions to be Made With the consent of the trustee and the member, any other person including a spouse of that member or another member may make contributions to the fund in respect of that member.
Part C Contributions Split Requests Member may ask the trustee that contributions to the fund in respect of that member be allotted to the accumulation account of that member's spouse. Accommodated by provision for contribution splitting. Part D Permissible Actions if Certain Contributions Accepted Trustee may: release funds to the member where the trustee has received a member release authority; or release funds to the Commissioner of Taxation where the trustee has received an ATO release authority.
F Benefit Payments F. Trustee must cash, or commence to cash, a member's benefit entitlement as soon as practicable after the member dies or the entitlement has vested.
Part G Trustee's Right to Commute Pensions Generally On written request by a pensioner, trustee may commute any part of a pension to a lump sum then pay it to the relevant person or their estate. G Pensions G. The pension may be of any type permitted by superannuation law. Transition to retirement income stream? Part G Trustee's Power to Pay Pension The relevant member or beneficiary may choose the type of pension that is to be paid, including a transition to retirement pension.
Allocated pensions? Part G Pensions No. No longer permitted under super law. Term allocated or market linked or growth pensions? Complying lifetime or fixed term pensions? Non-complying lifetime or fixed term pensions? Part G Trustee's Right to Commute Pensions Generally On written request by a pensioner, or in accordance with superannuation law or the Deed, the trustee may commute any part of a pension to a lump sum, and pay it to the relevant person or his or her estate.
Part G Segregation of Assets and Valuation Trustee may segregate from other assets those assets which are to fund a pension under the Deed. Part H Death benefit payments The Deed provides: for binding and non-binding nominations; and for death benefit agreements which form part of the Deed and bind the trustee concerning payment of a death benefit.
H Reserves If applicable H. Part C Trustee may establish or maintain other accounts or reserves Trustee may establish or maintain any other account for reserve of the fund that the trustee thinks necessary or desirable or that is required or permitted by super law.
However the trustee may adopt such practices as the trustee in its discretion thinks fit. I Investments I. Part E Authorised Investments Trustee must invest any assets of the fund that are not required for payment of benefits or other amounts under the Deed. Part E Authorised Investments This clause lists the types of investment in which the assets may be invested. Part E Forbidden Assessments Trustee must not make an investment in the form of a loan or other financial assistance to a member or a relative of a member.
Part E Strategy Trustee must formulate one or more investment strategies for the fund. J Borrowings J. Part L Limit on Borrowing When Borrowing is Allowed Including "Limited Recourse Borrowing Arrangement" Trustee must not except as provided for in the Deed and under superannuation law borrow money or maintain an existing borrowing of money. Trustee may borrow or maintain a borrowing of money in three circumstances: to enable trustee to pay a surcharge or advance instalment; to enable the trustee to settle a transaction to acquire any one or more of the securities listed in section 67 3 a of the SIS act; and under an limited recourse borrowing arrangement.
Part L When Borrowing is Allowed Including "Limited Recourse Borrowing Arrangement" Trustee may borrow or maintain a borrowing of money: to enable trustee to pay a surcharge or advance instalment; and to enable the trustee to settle a transaction to acquire any one or more of the securities listed in section 67 3 a of the SIS act. Borrowings for limited recourse borrowing arrangement? K Winding-Up K. Part N Trustee may elect to Wind up Fund Trustee may wind up the fund in the following cases: trustee decides to wind up the fund; employer-sponsor gives the trustee written notice that it has decided to wind up the fund; and there are no longer any members of the fund.
Remember me. Cleardocs Deed Reference — Part number letter and clause heading We cannot provide clause numbers as they vary between deeds depending on, for example, whether the trustee is a company. Has the trust deed been: Properly executed? Does the deed have a clause which deems the appropriate legislation into or out of the deed to allow the SMSF to remain complying?
If an obligation that superannuation law imposes on the trustees of the SMSF is not expressed in the Deed, then the Deed regards that obligation as incorporated into it.
The trustee may vary the Deed prospectively or retrospectively with the written consent of the employer-sponsor if there is one. Has the trust deed been amended since the last audit? Does the trust specify who may be a trustee? The Deed provides that: if the individual members are the trustees, then an additional member becomes trustee of the fund on the date his or her membership commences; and if a company is the trustee, then an additional member becomes director of the trustee of the fund on the date his or her membership commences provided that the trustee has done everything to appoint the additional member as a director of the trustee.
Does the deed permit members to be: A non-working spouse? Trustee must not accept a person as an additional member if this would mean that the total number of members would be more than 4. Do the members of the SMSF meet these two definitions?
Trustee must not accept additional members if the person is in an employment relationship with a member, unless they are related. Trustee must not charge any fees in relation to acting as trustee under the Deed or performing any services in respect of the fund.
No, and the Deed is not required to as section 52 of the SISA provides that if the governing rules of an SMSF do not contain the trustee covenants set out in section 52 2 , then they will be deemed to contain those covenants.
Does the trust deed require the trustees to prepare a financial report annually and for it to be audited? Does the trust deed require the trustees to keep the minutes and records of trustee decisions for at least 10 years and accounting records and signed financial reports for at least 5 years?
Does the deed contain a general power to accept all contributions permitted by superannuation law? This means that a corporate trustee structure is the only option for people who want to manage their SMSF themselves.
Alternatively, a second director who is not a member of the fund can be included in the corporate trustee structure of a single-member fund if this is what the member wants. Any SMSF can be set up as either a single-member fund or one with two to six members under current legislation. Multiple-member SMSFs must not have any trustees who are not fund members regardless of whether they have an individual or corporate trustee structure.
This means these funds can have up to six individual trustees, or six directors in a corporate trustee structure. This review fee is higher if the corporate trustee performs any other function besides being the corporate trustee for the SMSF.
They can often have lower set-up and ongoing costs as a result. If there is an SMSF membership change such as an existing member leaving or a new member joining, a fund with an individual trustee structure will need to have its asset ownership documents changed accordingly.
This is because the assets are registered in individual trustee names. This can be costly and time-consuming. A corporate trustee structure with more than one director may also have advantages if a fund member dies or becomes incapacitated and remaining members wish to keep the fund up and running. This is because a company can continue operating with just one director, but you need a minimum of two trustees under an individual trustee structure. An SMSF with an individual trustee structure will need to have a succession plan in place to continue operating in these circumstances.
SMSF fund trustees are liable for heavy penalties if they breach superannuation and taxation legislation. Yet penalties for the same offence are likely to be more severe for funds with individual trustees because the penalty is applied to each trustee individually. With a corporate trustee, a single penalty is applied to the company involved. The directors of the company then share the penalty.
Due to the limited liability of companies, corporate trustees have limited financial liability if they are personally sued.
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