Deciding on a self-managed super fund (SMSF) will begin with choosing a corporate or individual trustee structure. Both have pros and cons but you must use whichever structure you choose. To help you choose the right one, we thought it would be useful to put together a brief article discussing both types of SMSF structures. If this is something that you want to learn more about, read on as we discuss everything you need to know about corporate and individual trustee structures.
What Is the Role of Trustees?
Trustees own and manage the assets, or wealth, of a fund on behalf of members, or the people who contribute money to the fund and have a legal responsibility to make sure that the fund is following all of the rules, laws, and regulations that apply to superannuation funds in Australia.
An SMSF trustee has many legal responsibilities. The trustee must ensure the fund’s financial records, including balance sheets and income statements, are accurate. Every year, auditors do a check to ensure that everything is in order, and then the Australian Taxation Office (ATO) does its own audit to make sure everything is aboveboard. An SMSF trustee must also file annual reports with the ATO detailing how much was contributed to the fund as well as how much was paid out to members and how much was reinvested into the fund to keep it a going concern. According to recent ATO statistics, 63% of all SMSFs have corporate trustees and this structure is becoming increasingly popular. In the 12 months to June 2020, 81% of new SMSFs were set up with corporate trustees.
What Is the Corporate Trustee Structure?
Setting up a corporate trustee for your SMSF ensures that everything is kept separate from your personal assets. A company must be set up to act as the trustee of the fund, and all of your fund’s members must be directors of that company. The ownership of the SMSF’s assets are listed in the company’s name as the trustee. The corporate trustee cannot take any payment for its services.
What Is the Individual Trustee Structure?
Under an individual trustee structure, a company is not set up and registered for the purposes of holding the fund’s assets. Instead, all the assets are listed in the name of each individual trustee (on behalf of the fund). However, like corporate trustees, individual trustees cannot be paid for the services they provide to the fund and must separate their personal assets from the assets of the fund.
Conclusion
We hope this article proves to be useful when it comes to helping you further your understanding of both the individual and corporate trustee structures. As you can see, both of these structures are quite different from one another and you’ll need to accurately gauge which one is best for your needs. Be sure to keep everything we’ve discussed here in mind so that you can make the most informed decisions regarding your self-managed superfund.
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