When you set up a self-managed super fund (SMSF) you can choose one of two ‘trustee’ structures: individual or corporate.
Which is ‘better’? That’s up to you. Most of our SMSF clients choose corporate for the following reasons
- single member SMSFs are allowed
- easy to add/remove members as needed (such as with separation or death)
- greater borrowing capacity and/or better interest rates are often offered when borrowing to invest in property
- asset protection (SMSFAdvisor article discusses this in more detail)
- ATO penalties are applied collectively to the one corporate entity, rather than to each individual trustee
- (SMSFAdvisor article discusses this in more detail).
As for personal trustee structure, some clients choose it because
- a Directors Identification Number is not needed
- no annual ASIC renewal or registered agent fees are required
- no annual ASIC paperwork is needed,
However, individual trustees must be aware that
- trustee changes can be costly and time-consuming, and
- in the case of death, a two-member only SMSF will become immediately non-compliant.
For a more detailed comparison of the differences, refer here to the ATO website.
