A new information video produced by the Australian Taxation Office (ATO) to assist trustees with SMSF establishment has given the strongest indication yet that the regulator would prefer funds with a corporate trustee structure.
The video touches on the differences between having a corporate trustee and individual trustees and highlights a few key areas where having a corporate trustee can be a significant advantage.
One of these covers a structure whereby a person cannot be the sole member of an SMSF under an individual trustee structure as another trustee would have to be appointed. This is opposed to a corporate trustee structure where a person can be the sole member of the fund and the sole director of the corporate trustee.
Another difference explained has to do with ownership of SMSF assets and how having individual trustees will require the assets to be listed in the name of every trustee rather than just the corporation’s name. The video stresses when a trustee leaves or joins a fund, the asset ownership documentation has to be redone to reflect the change, whereas with a corporate trustee this step is unnecessary.
A third point demonstrated on the video deals with the new penalty regime for SMSFs where fines for compliance breaches are issued to each individual trustee. This is compared to single fines being issued to corporate trustees whereby each director of the company can share the cost of the single penalty amount.
ATO assistant deputy commissioner of superannuation Stuart Forsyth said he supported the use of a corporate trustee and the regulator needed a new message to encourage that type of structure. “To my mind it’s always surprised me that every adviser I talk to says they recommended a corporate trustee to their clients, but the stats show 75 per cent chose individual [trustee structure],” Forsyth said.
“Something doesn’t quite compute there, so we actually think we need to do something different. Corporate trustee makes more sense. If you’re going to change members at any time or go overseas, there are a whole host of reasons why you’d want to think about a corporate trustee seriously at the start.
“Any time you have to change parcel ownership it’s a lot easier with a corporate trustee. You don’t have to do anything with a corporate trustee.”