SMSF - human or corporate trustees?

Here is a useful flowchart (pdf file 178K) which may help you to decide whether to use human trustees or a corporate trustee.

And here is a useful interactive wizard to help you to decide whether to use human trustees or a corporate trustee. Just answer the questions and it will give you the answer.

The following table compares the features and consequences of using individual trustees for your SMSF against using a corporate trustee.

	Human trustees	Corporate trustee
Maximum number of members of the fund	Six*	Six*
Minimum number of members of the fund	One, but there must be at least two trustees.	One
Rule for trustees	Each member of full legal capacity must be a trustee.	Each member of full legal capacity must be a director of the corporate trustee.
So, can one person run the fund?	No	Yes
Suitable for a child member of the fund under the age of 18?	Yes (parent or guardian is trustee for the child)	Yes (parent or guardian is director in place of the child)
Can new members of the fund be added?	Yes	Yes
Can it invest in property?	Yes but a bank lender may require a corporate trustee.	Yes
On change of members how are assets dealt with?	All assets have to be transferred to the new trustees which could incur fees	No action required
On change of members how is bank account dealt with?	Names on account must be changed	No action required
What happens on legal incapacity of member?	The member's representative becomes trustee, which involves transfer of assets and change to bank account.	The member's representative becomes director, which is a matter of form filling.
What happens on death of member?	The member's executor becomes trustee, which involves transfer of assets and change to bank account.	The member's executor becomes director, which is a matter of form filling.
If permitted by law can the fund pay lump sums?	Yes	Yes
Establishment difficulty	With the step-by-step guide, difficult to go wrong	Some more form-filling is required as described in the step-by-step guide
Establishment costs	Cost of trust deed and set up pack	Cost of trust deed, company constitution and set up pack. Additional fee to incorporate the company, currently $457.
Annual costs	Optional financial advisor's and accountant's fees. Obligatory auditor's fee. ATO supervisory levy.	Same or possibly more in fees than for individual trustees, and add ASIC annual review fee (currently $45).

* Increased from four to six as from 1 July 2021.

Jeremy Gordon
19 June 2021

This article only applies to Australian self-managed superannuation schemes regulated by the Australian Tax Office.

Disclaimer
This article does not arise from any instructions from you and it is not legal advice given to you. You should check for yourself about human or corporate trustees. If you follow the information on this page, you do so at your own risk.

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Jeremy Gordon is an Australian barrister. He can be contacted by email at
or by mail at PO Box 354 Corinda QLD 4075.
The conditions applying to his work are here (opens in new window).