A Corporate Trustee is when you have a Company as the Trustee of your SMSF. This is a ‘Special Purpose Company’ as its only purpose is to act as the Trustee of a SMSF.
Around 80% of SMSFs set up are Individual Trustees per the ATO statistics. The reason for this is that it is simpler and more cost-efficient to use Individual Trustees rather than a Corporate Trustee. The default option Superannuation Warehouse uses to establish new SMSFs are with Individual Trustees. There is adequate statutory protection of an SMSF, so there is no pressing need to interpose yet another entity for asset protection purposes.
Superannuation Warehouse can set up a Corporate Trustee if it preferred by you. The major disadvantage of a Corporate Trustee is the up-front cost of establishing the Company. The pros and cons are set out below.
|If there’s only one Trustee, you do not have to involve another Individual as Trustee||Higher set-up fees|
|When Trustees change, you can change Directors in the Company only and do not have to change the Trust Deed for the Trustees (although the Trust Deed might still need amended for a change in Beneficiaries)||There is an annual review fee of $55 (was $47 in 2017) payable for maintenance of this entity to ASIC (you can pay this from the SMSF)|
|No extra protection offered to the SMSF assets due to this extra legal structure|
Changing from Individual to a Corporate Trustee
It is fairly straightforward to change Trustees without affecting the SMSF. You can go from Individual Trustees to a Corporate Trustee and vice versa. When purchasing property, the banks may require a Corporate Trustee.
To execute a change of Trustee to a Corporate Trustee, you will need to complete a Minutes Change of Trustee as well as a Trustee Consent. The new Trustees will also need to sign a new Trustee Declaration in their capacity as Trustee of the corporate entity (click on the links to download these documents).
Apart from the initial set-up fees, Superannuation Warehouse does not charge a fee to maintain the Corporate Trustee. This is all included in the fixed annual fee. Corporate Trustee companies are reviewed annually by ASIC and the review company statements will be posted directly to the Trustees of the Fund. We can assist the Trustees if they require any changes to be done for the Corporate Trustee, for example an address update, removal of Director etc.
Single Member Funds
Single Member SMSFs with a Corporate Trustee allows the only Member to be the sole Director of the Company and have full control over running of the SMSF. If the SMSF had Individual Trustees, it would be necessary for another individual to act as the second Trustee and assist in the running of the SMSF.
Lastly, if you want to add property to your SMSF later on, you may need a Corporate Trustee for that structure. The Corporate Trustee for the Bare Trust cannot be the same as the Corporate Trustee for the SMSF. Hence, a Corporate Trustee will have no benefit in a property Limited Recourse Borrowing Arrangement.