Why Every SMSF Should Have a Corporate Trustee

Let’s face it, when it comes to managing an SMSF, life happens. And when life happens, you want your SMSF to keep up, not fall apart. That’s why I, Nadia  from Unfair Advantage Accounting, wholeheartedly recommend setting up a company as your SMSF’s trustee. It’s like upgrading from a bicycle to a car — more efficient, reliable, and ready for any road ahead. Here’s why:

A Fund That Adapts to Change

Life isn’t static, and neither is your SMSF. Members pass away, kids join the fund, marriages end, or health issues arise. With a corporate trustee, these changes are no big deal. Just update the directors with a bit of paperwork, and you’re good to go.

Now compare that to funds with individual trustees. Every time there’s a change, you’re looking at updating the legal names on all investments. Some assets might even need to be closed or restructured. Worst case? You’re temporarily locked out of your fund’s assets. Not fun. A corporate trustee keeps things simple and stress-free.

Full Control for Single-Member Funds

Want to go solo with your SMSF? With individual trustees, you’ll need a second person. But with a corporate trustee, you can take the wheel alone as the sole director. It’s the ultimate level of control over your super.

An Option for Larger Funds

If your SMSF has five or six members, individual trustees might not even be an option. Some states cap the number of trustees for a trust at four. A corporate trustee skips that hurdle, making it the only practical choice for bigger funds.

Keeping Personal and Fund Assets Separate

Here’s a golden rule: SMSF assets must stay separate from personal ones. A corporate trustee makes this a breeze. Since the fund’s assets are legally owned by the trustee company, proving compliance to auditors and the ATO is as simple as showing your paperwork. No grey areas, no headaches.

Shielding Personal Assets

Let’s talk liability. If your SMSF owns property, the trustees could be held responsible for accidents on the premises. With individual trustees, that liability extends to your personal assets. But with a corporate trustee? Liability is limited to the fund’s assets. It’s like wearing a financial seatbelt — you’re protected.

Extra Protection from Penalties

We all make mistakes. But breaking super rules can lead to penalties from the ATO. Here’s the kicker: penalties are issued per trustee. With individual trustees, each person is on the hook. A corporate trustee? Just one entity, one penalty. Enough said.

Costs That Pay Off

Yes, setting up a corporate trustee costs money. There’s an upfront setup fee and annual ASIC fees. But when you weigh those against the benefits, it’s a no-brainer. Special-purpose companies designed exclusively for SMSFs even enjoy lower fees, keeping costs manageable.

Now, a word of advice: set up a new company exclusively for your SMSF. Don’t reuse a company that runs your business or manages your family trust. Here’s why:

• Clarity: Mixing roles can muddy the waters, making auditors’ jobs harder and increasing your costs.
  
• Legal Protection: If your company faces legal threats, the SMSF’s assets could come under scrutiny. Keeping things separate avoids unnecessary drama.
  
• Director Control: SMSFs have specific rules about directors. Mixing entities could lead to conflicts that complicate both your SMSF and your other ventures.
  

The Director ID

If you’re already a director, you’ve got a unique Director ID. No need for a new one — just use the same ID for your SMSF trustee company. If you don’t have one yet, get it sorted. It’s a quick win for compliance.

The Bottom Line

Think of a corporate trustee as the Swiss Army knife of SMSF management. It’s versatile, protective, and ready for anything life throws at you. At Unfair Advantage Accounting, we’re here to make the transition smooth and stress-free. Ready to take your SMSF to the next level? Let’s chat!