SMSF Superfund - Individual or Corporate Trustee for your Self Managed Super Fund (SMSF)
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Individual or Corporate trustee

Individual or Corporate Trustee for your Self Managed Super Fund SMSF

Whether your self-managed super fund (SMSF) is to have individual trustees or a corporate trustee is one of the first questions to be answered when setting up your SMSF. If an individual trustee is used, the members also act as the trustees of the SMSF. If a corporate trustee is used, the company acts as the trustee and all the members of the SMSF are required to be directors of that company.


We are often asked by clients to outline the main differences between both these two options and there are pros and cons to both, so we have outlined below some issues you should consider when making your decision.




An individual trustee structure may initially be better suited to those who are cost conscious, as it is typically less expensive to establish a SMSF with individual trustees. Setting up a SMSF with individual trustees is usually simpler and cheaper as there is no additional establishment costs such as the setup of a company trustee, no ongoing annual fees with ASIC and members are not required to understand and follow corporation law requirements.

While the use of individual trustees may remove the additional costs of setting up and maintaining a corporate trustee, the initial savings may be outweighed if circumstances in the SMSF change. Difficulties can arise in various situations including where one member dies, where members experience a marriage breakdown, where a member leaves the fund, or where an additional member joins the fund. This is where the benefits of a corporate trustee structure may offer a better suited alternative.



Easy to Make Changes to your SMSF

If your SMSF was setup with individual trustees and a member dies or wants to leave, or if you want to add another member, then you must change the titles of all the SMSF assets and update the trust deed, which can be a time consuming and costly exercise. Whereas with a corporate trustee, when a member leaves or joins the fund it simply requires the appointment or resignation of that member as a director of the trustee company. ASIC must be informed of the change, but the trustee remains the same so there is no need to update the trust deed and there is no need to change any title to the SMSF assets.


This means that it is much easier to add or exit members with a corporate trustee. It also means that when a member dies or leaves, the assets do not have to be re-registered and you do not potentially need to find another trustee. This is because an individual trustee structure requires a minimum of two trustees, whereas corporate trustees need only have one director, as detailed below in “single member funds”. So for example if you had a husband and wife as members of a SMSF and one dies, the remaining member would immediately either have to find another individual to act as trustee of the SMSF or setup a corporate trustee.

Single Member Funds

A corporate trustee allows for a single member to also be the sole director of the trustee company and have full control over the running of the SMSF. In comparison, if the SMSF had an individual trustee structure, it would be necessary for a second individual to also act as a trustee and assist in the running of the SMSF but agree to not be a member, as a single member fund with an individual trustee structure still requires two individual SMSF trustees.

Borrowing in your SMSF

If you are thinking of borrowing to buy property or other assets in your SMSF, most lenders will insist that the SMSF has a corporate trustee.

Reduced Penalties

If super laws are breached, then the ATO will administer the penalty on each SMSF trustee, so if you have an individual trustee setup the penalty would be applied to each individual trustee. Meaning for example, if you had four trustees in your SMSF and the ATO issued a $1,800 penalty, it would be payable by all trustees with a total penalty of $1,800 x 4 = $7,200. Whereas, with a corporate Trustee if super laws are breached administrative penalties are levied on the corporate trustee alone, meaning only one penalty of $1800 in total.

Reduced Trustee Litigation Exposure

Many SMSF trustees overlook the potential liabilities that may arise in relation to their role. Where the trustee of a SMSF is subject to litigation, a corporate trustee structure will usually provide additional protection by limiting liability to the assets of the company and not those of the underlying directors. There is limited liability for directors, whereas individual trustees can be personally liable for any decisions or actions they have taken in relation to a SMSF asset.