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Choosing an individual or corporate trustee is one of the first decisions you need to make when setting up a self managed super fund (SMSF). Each option has advantages and disadvantages in terms of cost, liability, asset protection and how easy it is to change trustees.

The process could be time consuming and expensive for individual trustee. If one of the individual trustee discontinued performs as trustee for the trust such as died or retired, the legal title has to be changed every time when this happens. State government authorities may charge a fee for title changes as a result of changes in membership. On top of this cost, most financial services charge fees for amending the titles of the assets within the SMSF.

However, the changes of director of a corporate trustee is cheaper and less hassles since the change doesn’t affect the legal ownership of the corporate trustee itself. What the corporate trustee can do is appointing another director or leave it as sole director and inform the ASIC and ATO about the changes.

Clarity of Assets

As a member of the fund, individual trustee is exposed to the risk of intermingling their assets with the fund assets; whilst due to the characteristics of independent legal entity of company, the legal ownership of the fund assets is under company which is total separated to each director’s (members) personal assets.

Liability

All trustees are liable to members for any losses incurred as a result of a breach of trust. Individual trustees are personally liable whereas corporate trustees are liable to the extent of the assets of the company (usually $2) unless the directors can be made personally liable (which they generally will be).

Cost

Individual trustee is cheap to establish and running until the change happens to trustees. Corporate trustee requests a company to set up first therefore establishing and running fees will be more expenses. Currently, company registration with ASIC is $469 and $47 annual fee for acting solely as super fund trustee.

Need Help?

If you are unsure whether your SMSF’s investment strategy still suits the fund, or whether it needs reviewing after a change such as a member starting a pension, Pitt Martin Group can help you review and document your strategy, weigh up diversification, liquidity and insurance, and prepare the evidence your auditor will expect.

As Sydney tax accountants, we assist trustees with SMSF compliance, investment strategy reviews and practical superannuation advice.

Pitt Martin Group is a firm of Chartered Accountants, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group, Sydney tax accountants, is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, Registered Australia Tax Agents, membership certification of the Chartered Accountants Australia and New Zealand (CA ANZ), certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.