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Corporate or Individual Trustee in your SMSF?

Wayne Groznik - Wednesday, May 06, 2015

Corporate or Individual Trustee in your SMSF?

There is always great debate on the benefits and disadvantages of the type of trustee you should have in your SMSF.

Staggeringly, 92% of funds setup in the 2014 year were setup as individual trustees.

This is quite alarming, as even the Australian Taxation Office has recommended recently that a corporate trustee is the better way to run your fund.

The ATO website, states a few very good comparisons between the two and what you should be consider either way.

A few reasons that we, at Set4Life, will always recommend a corporate trustee for all our SMSFs are:

- Costs
- Separation of assets
- Penalties
- Succession


All, or any of these reasons, makes in our opinion the choice a no brainer. The main reason that we get asked about though, is the addition costs associated with a corporate trustee, but honestly, the costs of the annual ASIC fee (currently $45pa), is quite insignificant in the scheme of the expenses of the fund, especially where the average fund balance is half a million dollars.

Another reason we see that a corporate trustee is an extremely important consideration, is where you are looking at doing some borrowing in your SMSF, via a limited recourse loan, most lenders that we have dealt with in our time, have a prerequisite to have a corporate trustee before any lending is to happen.

The ATO website also has an excellent video on choosing individual or corporate trustees.

If you currently have a SMSF with an individual trustee and are looking to get that amended give Set4Life a call, we have completed many of these over the last few years, and by the looks of it, with the most recent statistics, we will have many more to do over the next few years.

 

https://www.ato.gov.au/super/self-managed-super-funds/setting-up/choose-individual-trustees-or-a-corporate-trustee/

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