Why a corporate trustee is recommended for your SMSF
When establishing an SMSF, you can choose between individual trustees (where each member is a trustee) or a corporate trustee (a company that acts as trustee, with each member being a director). While both structures are legally valid, a corporate trustee is recommended in almost all cases.
Limited liability is the primary advantage. If the SMSF incurs a liability, for example through a property investment or a legal claim, individual trustees are personally liable and their personal assets outside super are at risk. With a corporate trustee, liability for those fund debts is generally limited to the assets of the trustee company, which typically holds no assets beyond its role as SMSF trustee. This protection does not extend to SIS administrative penalties, which are imposed personally on the directors (jointly and severally) and cannot be paid from fund assets, and directors can still be personally liable in some cases under the Corporations Act.
A corporate trustee provides continuity. If a member dies, becomes incapacitated, or leaves the fund, the corporate trustee continues to exist. New members are added or removed by changing the directors of the trustee company. With individual trustees, a change of member requires a change of trustee, which means re-registering all fund assets in the names of the new trustees, a process that can be costly and time-consuming, particularly for property.
Administrative simplicity is another consideration. A corporate trustee can have a single member (and single director), whereas an SMSF with individual trustees generally requires at least two trustees. If you are establishing a single-member SMSF, a corporate trustee is practically essential.
The cost of establishing a corporate trustee is the ASIC registration fee plus our service fee ($834 total). The trustee company is registered as a special purpose company, which attracts a reduced ASIC annual review fee. The combined cost of the SMSF deed and corporate trustee at CoSec Partners is $1,263 including GST.
Frequently asked questions
Is a corporate trustee more expensive than individual trustees?
There is an upfront registration cost and an ongoing ASIC annual review fee, though a superannuation trustee company pays the reduced special purpose rate. Set against that is the cost avoided when a member joins, leaves, or dies, because no fund asset has to be re-registered into new trustee names.
Can an existing SMSF change from individual trustees to a corporate trustee?
Yes. A trustee company is registered, the change of trustee is documented under the deed, the ATO is notified, and every fund asset is transferred into the company’s name. Property titles make this the expensive step, which is why a corporate trustee is cheaper at establishment than as a later conversion.
Does the trustee company need to do anything else each year?
It is an ordinary ASIC-registered company, so its details must be kept current, the annual review fee paid, and changes notified within 28 days. Where the constitution restricts the company to acting as trustee of a regulated superannuation fund, the reduced special purpose review fee applies.
This article is general information only and does not constitute legal, financial, or tax advice. While we endeavour to keep content accurate and current, laws and regulations change frequently. For advice specific to your circumstances, please consult a qualified professional adviser. CoSec Partners Pty Ltd accepts no liability for actions taken based on this content.