Benefits of changing SMSF trustees in Geelong from individuals to corporateNovember 30, 2015
In Australia the majority of self-managed super funds are controlled by individual trustees, rather than corporate trustees. But there are two main reasons that the balance could well begin to tip towards a corporate approach for your SMSF in Geelong in the future.
The ATO’s new penalty regime is part of that shift. And it’s one that causes more hardship to individual trustees than their corporate counterparts. When the ATO imposes a financial penalty for non-compliance to super rules, that penalty is levied fully on every individual trustee. Because there can be up to four individual trustees that means four times the penalty. And that’s not pretty. But it’s a different kettle of fish for a corporate trustee, which is a company acting in the trustee role. Because there is just one corporate trustee that means there’s just one penalty imposed if super rules are breached in the fund’s management.
ATO penalties aren’t just a slap on the wrist. There can be pain, real financial pain. And that’s something everyone in a trustee role with a SMSF in Geelong wants to avoid. Some compliance breaches can attract penalties of more than $10,000. That’s a hefty financial burden if you’re an individual trustee but more manageable for a corporate trustee. And that penalty payment cannot come from within the SMSF’s collection of assets. It has to be sourced from personal assets.
The second strong benefit in favouring corporate over individuals when it comes to trustees lies in dealing with inevitable membership change, which could happen through circumstances including death and divorce. This can trigger strong waves for individual trustees, who need to appoint a new trustee to the position – there needs to be a minimum of two individuals. That involves updating investment holdings including bank accounts, shares and property to the new trustee names. But if there’s a company filling the role of corporate trustee, life continues on smoothly. There is no upheaval to the trustee and the company proceeds with a simple change to director and shareholder within its ranks. It’s a quick and easy process.
At CD&G Accountants, we are your expert SMSF Geelong accountants when it comes to all things super. And we’re happy to help you weigh up whether a switch to the corporate trustee approach is right for your self-managed fund.