Under the Superannuation Industry Supervision (SIS) legislation, an SMSF must have either a company or a group of individuals act as trustee of the fund. A single-member fund with an individual trustee must appoint a second individual trustee to comply with SIS legislation, with control and responsibility being shared by both trustees. A corporate trustee, however, can have a sole director, therefore allowing a single member full control over the management of the fund.
For SMSFs with more than one member, each member of the SMSF must also be a trustee or, where the trustee of the SMSF is a company, each member must be a director of the company.
Over 74 per cent of SMSFs have individual trustees instead of a corporate trustee. According to the ATO, the trend towards individual trustees is accelerating.
Here are several points and potential advantages of each structure to consider.
Administrative considerations
All assets of the SMSF must be held in the name of the trustees.
In the case of individual trustees, this means all trustee names must be on the title of all the SMSF’s assets and that any changes in membership – which may be due to marriage, divorce, death or adding children to the SMSF – would require changes to the names registered on the title of assets. Changing the titles for every asset owned by the SMSF can be a time-consuming and costly process.
For corporate trustees, the only requirement is notification to both ASIC and the ATO of any change of directors and members, as the name on the assets is still the name of the corporate trustee.
