www.esuperfund.com.au

Trustees


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What is a Trustee?

The Trustees control the SMSF and make all the Investment decisions for the SMSF.  When you establish a SMSF you have a choice of whether to appoint Individual Trustees or a Company Trustee to act for your SMSF.  Each option is detailed below.  It is important to understand that the SMSF Trustees do not own the SMSF Assets but are simply responsible for administering the SMSF which includes:

Maintaining all records of the SMSF (noting ESUPERFUND maintain most records electronically).
Establishing the SMSF Investment Strategy (noting a Standard Strategy is provided by ESUPERFUND).
Complying with all Super Laws (detailed in our Learn Section).
Lodging Tax and Regulatory Returns (attended to by ESUPERFUND).

Further details about the roles and responsibilities of Trustees can be found in the ATO publication "Role and Responsibilities of Trustees".

 
 
Trustee Options

You can appoint either Individuals as SMSF Trustees or a Company as a Trustee.  Each is discussed in turn:

Option1:  Individual Trustees

It is a legislative requirement that where a SMSF has individual Trustees, it must have a Minimum of 2 Individual Trustees and a Maximum of 4 Individual Trustees.  The Individual Trustees will be responsible for running the SMSF.  Anyone over 18 can be a Trustee of a SMSF including a spouse, adult child or friends.  It is FREE to appoint Individual Trustees for a SMSF.

Option 2:  Company Trustee

Alternatively you may select a Company to act as a Trustee for your SMSF. In this case the Members of the SMSF will need to be the Directors of the Company Trustee. The Directors of the Company Trustee will be responsible for running the SMSF. For your convenience, if you do not have an existing Company and would like to establish a Company to act as Trustee for your SMSF, ESUPERFUND offers a Company Setup Service as part of its online SMSF Application here. The cost of establishing a Company with ESUPERFUND is . In addition where the sole purpose of the company is to act as Trustee for a SMSF (for a "special purpose") the annual ASIC review fee is reduced to per annum compared to per annum for a company that is not a "special purpose" company. There is no additional annual fee payable to ESUPERFUND to manage the Company. Please note that you are not obligated to use the ESUPERFUND Company Setup Service and can arrange to setup a Company with any provider desired. The Company details can in turn be entered into our online application when applying for an SMSF here.

 
 
Which type of Trustee should I use?

It is important to understand that there are no administration benefits, fee savings or taxation savings by using one type of Trustee type over another. With this in mind Individual Trustees are the most popular way to establish a SMSF as appointing Individual Trustees for a SMSF is FREE! The only drawback is that you need a minimum of two Individual Trustees. This is a legal requirement. Where you have 2 Individual Trustees, appointing a Company as a Trustee is a less popular option given that there is a cost to setup a company of and an ongoing ASIC fee where a company is used as the SMSF Trustee (approximately per annum). Most clients prefer to avoid this fee.

 
 
What if I only want one person in the SMSF?

It is a legislative requirement that where a SMSF has individual Trustees, it must have a minimum of 2 Individual Trustees.  Almost anyone can be a Trustee of a SMSF including a spouse, adult child, parents and friends as long as they over 18.  If you cannot find a second adult Trustee or you have decided you do not want a second adult Trustee involved in the SMSF, then the only option is to establish a Company to act as Trustee for the SMSF.  You will in turn be the sole Director and Shareholder of the Company giving you total control of the SMSF. 

 
 
When would I use a Company as a Trustee?

As detailed above there are no administration benefits, fee savings or taxation savings by using a Company Trustee, however there is a cost to setup the company of and an ongoing ASIC fee of approximately . Notwithstanding this, we have detailed below some reasons clients elect to use a Company as the Trustee of their SMSF. For most clients the reasons below are not material enough to justify the additional expense of using a Company as Trustee. But the choice is ultimately yours! It is important to note if you setup the SMSF with Individual Trustees you are always free to change to a Company Trustee at anytime in the future.

Reason 1:  You only have One Person

There are times where a client only wants to establish a SMSF for one person (themselves) and do not want a second Individual Trustee.  In this instance the only option is to establish a Company to act as Trustee for the SMSF.  You will in turn be the sole Director and Shareholder of the Company giving you total control of the SMSF.

Reason 2:  You are worried about what happens when a Trustee leaves the SMSF or dies

If you have Individual Trustees and one Trustee leaves the SMSF or dies you cannot continue the SMSF with only one Individual Trustee.  To avoid this issue some clients setup a Company to act their SMSF Trustee.  However this is unnecessary  because if you have two Individual Trustees and one person leaves or dies you can simply appoint a new Individual Trustee who is over 18 (eg child, friend, parent, spouse etc) at that time.  Alternatively if you are left with one Individual Trustee and cannot find a second Individual Trustee, you can appoint a Company Trustee at that time and the SMSF can continue in the normal way.

Reason 3 - Avoiding the need to update Accounts

When you add or remove Trustees in your SMSF, you must update all the accounts that the SMSF has.  Accordingly if you have Individual Trustees and a Trustee is added or removed then the broker account, Transaction Bank Account and all other accounts the SMSF has must be updated with the details of the new Trustee.  This is not necessary with a Company Trustee as the Company always remains as the Trustee even if the underlying Directors and Shareholders of the Company change.  It is important to note that changing the account details with the Broker and the transaction bank is handled by ESUPERFUND free of charge.

Reason 4 - You want a higher LVR for Property

If you are considering purchasing Commercial Property with Borrowings in your SMSF then the Lender may lend more to your SMSF, if you have a Company as the SMSF Trustee.  This is not relevant for Residential Property, as Macquarie Bank (our preferred Lender) currently lends 80% of the Property Value if you have a Company Trustee or Individual Trustees.

 
 
How do I establish a Company Trustee?

For your convenience, if you do not have an existing Company and would like to establish a Company to act as Trustee for your SMSF, ESUPERFUND offers a Company Setup Service as part of its online SMSF Application here. The cost of establishing a Company with ESUPERFUND is . In addition where the sole purpose of the company is to act as Trustee for a SMSF (for a "special purpose") the annual ASIC review fee is reduced to per annum compared to per annum for a company that is not a "special purpose" company. There is no additional annual fee payable to ESUPERFUND to manage the Company. Please note that you are not obligated to use the ESUPERFUND Company Setup Service and can arrange to setup a Company with any provider desired. The Company details can in turn be entered into our online application when applying for an SMSF here.

 
 
Can you use an existing established company as the SMSF Trustee?

Yes.  If you have an existing established company you can nominate this company to be the Trustee of the SMSF.  This Company can also undertake other activities.  We do however recommend you seek advice as to whether using an existing established company is appropriate to act as Trustee for your SMSF.

 
 
Does the Trustee Company have to lodge any documentation each year?

No.  If the Company only acts as Trustee for the SMSF it is not required to prepare or lodge a Tax Return annually.  Accordingly there are no additional compliance fees associated with a Trustee Company other than the annual ASIC Lodgment Fee of approximately .

 
 
Can I reimburse myself for the Company Setup Fee?

Yes provided the corporate trustee is a special purpose company established and maintained with the sole function of acting as the trustee of your SMSF. In this case, it is reasonable to treat the expenses of setting up the company as expenses incurred by the SMSF in producing assessable income since the existence of a company is one of the key components of establishing your SMSF with a corporate trustee. The cost of establishing a Company (if you have not already done so) with ESUPERFUND is which is predominantly an establishment fee payable to ASIC. However the expense will not be tax deductible to the SMSF.

 
 
How do I Add or Remove Trustees?

Once your SMSF is established and the Trustees appointed there are circumstances where you may need to add or remove the Trustees.  Learn more about change of Trustee.