Choose your SMSF trustee structure

Types of trustee structures

You can choose one of the following trustee structures for your self-managed super fund (SMSF):

• individual trustees
• a corporate trustee (a company acting as trustee for the fund).

This page explains the different rules for each structure. You should be aware of the differences and consider discussing the best approach with an SMSF professional.

Requirements for each structure

There are different requirements depending on whether your SMSF has individual trustees or a corporate trustee.

Member and trustee requirements

If you choose individual trustees:

• your SMSF can have up to 6 members
• each member of the SMSF must be a trustee
• each trustee must be a member of the SMSF (single-member funds must have 2 trustees, only one must be a member)
• members cannot be an employee of another member unless they are relatives.

Some state and territory laws restrict the number of trustees a trust can have to less than 6. As an SMSF is a type of trust, consider seeking professional advice to check if your fund is affected. If it is, you could structure your SMSF with a corporate trustee.

If you choose a corporate trustee:

• each member of your SMSF must be a director of the corporate trustee
• for a single-member fund, the member can be either
  • the sole director of the corporate trustee
  • one of 2 directors of the corporate trustee provided either the member and other director are relatives or the member is not an employee of the other director
• directors of corporate trustees must have a director identification numberExternal Link (director ID), which is a unique identifier that a director will apply for once and keep forever.

Establishment and ongoing costs

Paying establishment costs

You can pay for SMSF establishment costs yourself or from the fund.

If you personally pay establishment costs before or after you set up your SMSF, the fund can reimburse you. Regulation 5.02 of the Superannuation Industry (Supervision) Regulations 1994 allows the fund to charge eligible establishment costs against your super benefits.

If you want reimbursement, seek it as soon as the SMSF has available cash.

The reimbursement does not count as financial assistance.

Costs that are not contributions

If you pay the fund's establishment costs before the SMSF legally exists, the payment is not a contribution. This applies whether or not the fund later reimburses you because the SMSF did not exist when you paid the costs.

If you pay establishment costs after the SMSF is established and the fund reimburses you, the reimbursement is not a contribution because the fund’s capital does not increase.

Costs that are contributions

If you pay establishment costs after the SMSF is established and do not seek reimbursement, you must treat the amount as a contribution.

This is because you have paid an expense of the SMSF and increased the fund’s capital.

Costs the fund can charge

An SMSF can only charge establishment costs against a member’s benefits if the costs are reasonably considered to be expenses of the fund.

These costs may include expenses for setting up the SMSF and its trustee structure, such as:

• preparing the trust deed
• establishing a corporate trustee
• Australian Securities and Investments Commission (ASIC) registration fees
• legal, administrative or advice costs directly related to setting up the SMSF.

Tax treatment of establishment costs

Establishment costs are capital expenses. The SMSF cannot claim a deduction for these costs.

ASIC fees for a corporate trustee

If your SMSF has a corporate trustee, you must pay ASICExternal Link fees.

ASIC charges a fee to register a corporate trustee. It also charges an annual review fee.

The annual review fee is lower if the corporate trustee acts only as trustee of an SMSF. The fee is higher if the corporate trustee also performs another function, such as running a business.

Individual trustees and directors of the corporate trustee cannot be paid for their duties or services performed as trustee in relation to the SMSF.

Governing rules

Individual trustees and directors of the corporate trustee must follow the rules in the:

• SMSF trust deed
• tax and super laws.

In addition, directors of the corporate trustee must follow the rules in the:

• company's constitution
• Corporations Act 2001.

Directors of a corporate trustee must obtain a director IDExternal Link before registering the fund. When conducting our SMSF registration reviews, funds identified with a corporate trustee structure that don't have a director ID will be unable to proceed. Penalties may be imposed by ASIC if directors don't have a director ID.

Ownership of SMSF assets

All fund assets must be:

• kept separate from the personal assets of trustees and directors
• in the name of the fund or the name of the individual trustees 'as trustees for' the fund.

If your SMSF has individual trustees, when a trustee is added or removed, the name in each asset's ownership document must be updated. This can be costly and time-consuming. State government authorities and financial institutions may charge a fee for title changes.

If your SMSF has a corporate trustee, when a person starts or stops being a member, they become, or cease to be, a director of the corporate trustee. You must notify us and ASIC of any change in director.

The name on the ownership documents doesn't change. It remains in the name of the corporate trustee.

Succession

SMSFs with individual trustees must always have at least 2 trustees. If your fund has 2 individual trustees and one trustee leaves or dies, you must do one of the following:

• appoint another trustee
• change to a corporate trustee structure
• wind up the fund.

If you appoint another individual trustee, you need to notify us within 28 days.

Funds with a corporate trustee can operate with one director. The corporate trustee does not change if a director leaves or dies. However, if the directors change, you need to notify us and ASIC within 28 days.