A trust is an arrangement where a trustee looks after assets for the benefit of others. A trustee has a duty to act in the interest of their beneficiaries and manage the trust assets. Trustees can be individuals or corporations- known as corporate trustees.

Corporate trustees can be used in Family trusts, Unit trusts and Hybrid trusts.  It is also increasingly common to use a corporate trustee in Self-Managed Superannuation Funds (SMSFs) as there are a number of advantages and tax concessions. For example, by building a special purpose company to act as corporate trustee for an SMSF, you can save hundreds of dollars in ASIC fees.

If you are thinking about jumping on the bandwagon and setting up a SMSF with a corporate trustee, read ahead to find out how.

SMSFs are a breed of superannuation funds managed by four or less members. SMSF members are usually trustees or directors of a company where a corporate trustee is used. Typically SMSFs are used by families, close friends or business associates who wish to retain control of the fund and decide how to manage its assets.

Trustees of an SMSF can decide how to invest the assets of the fund, formulate member’s retirement strategies and pensions and determine details of the Trust Deed. At the end of the day corporate trustees will be responsible for the trust. However, it is common and advisable for trustees to engage professionals such as auditors, accountants, lawyers and financial advisors to help them discharge their duties.

There are a number of benefits to having an SMSF. Some of these include:

• Greater Investment Choice: SMSF members can choose to invest in a wider range of investments such as property, direct shares and overseas assets. However when doing so members must make sure that they comply with the relevant superannuation legislation and regulations.

• Estate Planning: SMSFs provide a way to look after your spouse and children when you die. SMSFs are a tax effective means of providing income payments or payouts to a member’s family upon their death. As estate planning strategies are separate from members wills, tax concessions can be made. This also protects the estate of the deceased from legal challenge and the claws of the Public Trustee.

• Taxation Planning: SMSFs provided an added advantage over retail funds as members can chose how to manage their tax liabilities. Strategies to limit tax include selecting investments such as high franking dividend stocks and transferring assets to the tax free pension phase of an SMSF.

• Cost Effective: Administrative and reporting costs can be cut by managing SMSF assets yourself. These savings are amplified for larger funds.

So you’re sold on the idea. How do you set up a SMSF with a corporate trustee? Read on to find out…

Step One: Building a company

You can use our Build a Company (ELodgement) document to establish your company to act as trustee and have it lodged with ASIC. Remember, the people you want to be members of the SMSF must also be Directors of the company. The cost if this is $552 ($542 for Platinum Members) and includes the $433 ASIC fee. The Build a Company kit includes:

Step Two: Setting up a SMSF Deed

Once your Company is registered, set-up your SMSF Deed. This costs $220 ($129 for Platinum Members). The Law Central document includes:

You will also need to pay the applicable stamp duty fees.

Download and complete the ATO’s application form for registering a SMSF (This includes registering for a TFN and ABN on the same form). A link is provided to this form when you purchase your SMSF from Law Central.

Have the corporate trustee sign the ATO’s Trustee Declaration form. A link to this form is provided when you purchase your SMSF from Law Central.

After this, you should open a bank account for the SMSF and appoint an Auditor.

SMSFs have a number of advantages such as investment flexibility and tax concessions. Law Central has made this process easy with Build and Company and SMSF Deeds ready for you to generate online.  Rest assured we will make sure you don’t miss any vital steps. However, SMSFs are not for everyone so make sure you consider your needs when deciding to set one up.

Related Documents

• Build a Company (ELodgement)
• Self Managed Superannuation Fund Deed