SMSF Company registration for Special Purpose company on our law firm's website
SMSF Company as corporate trustee of your Self-Managed Super Fund
Build an SMSF Company that acts solely as the trustee of your Self-Managed Super Fund (SMSF). The constitution prohibits distributing income and property to shareholders. It is 'safer' for your SMSF to have a Special Purpose Company. Therefore, you save on ASIC's annual charge.
Your new SMSF Company is vetted by our lawyers. This is before it proceeds via our direct connection with ASIC.
The incorporation of an SMSF Company with ASIC is an important legal transaction. This is why we afford it this extra level of care and attention to detail.
Which is better as trustee of your SMSF: company vs human?
When I started practising in superannuation law in the 1980s the majority of Self-Managed Superannuation Funds had just dad as the trustee. (In those days you only needed one trustee. Now all the members must be trustees. Or, all the members must be directors of the company.) These days most superannuation lawyers. accountants and financial planners recommend a company as trustee of your SMSF. This is because:
1. A company lives forever. This is better succession planning. If a member dies you don't need to transfer land. The land just says in the company name. You change the directors only. (While there is no stamp duty to transfer the property from one human trustee to another it is an added expense.)
2. You need a Deed to change an SMSF Trustee. You change trustees via a Deed of Variation of your SMSF. Conversely, changing a director is straightforward. This is because merely changing a director of the company does not change the Trustee.
3. If mum and dad are the two trustees there is a problem if one dies. An SMSF cannot have just one human as trustee. You always need at least two humans. Upon your spouse's death, you, therefore, need to act quickly to appoint another human as trustee (or replace the human with a company). However, when your spouse dies the last thing you want to worry about is getting your SMSF compliant again. In contrast, a company is compliant with just one director.
4. Ease of audit.
You can't mix SMSF assets with your assets. When you have a dedicated special purpose company that has no job other than to be your SMSF trustee this is easier to comply with. When Mum and Dad buy an asset for the SMSF they may forget to add 'as trustee for the SMSF'. You are in breach. In contrast, if you buy an asset in the name of the company and forget to put 'atf the SMSF' it is not such a big issue.
5. Contrary to popular belief, an SMSF can go insolvent. Any structure, even a conservative super fund, may not be able to pay its debts as they fall due. Also, the SMSF can be sued. If you have a company you have another layer of protection. (A director of a company does not automatically go down with the sinking trustee company.)
6. When an SMSF wants to borrow money the bank requires that both the SMSF and the trustee of the Custodian Trust both be companies (different companies, of course).
7. The 'Central Management and control' rules are easier to comply with if you travel outside of Australia.
8. ATO penalties are less draconian with special purpose company. In contrast, human Trustees are jointly and severally liable.
9. A corporate trustee (special purpose company) pays lower ASIC fees each year. (Your special purpose company won't have an ABN as it does not trade in its own right. Instead, the SMSF has the ABN. Your corporate trustee does not prepare accounts for itself, as it has no assets. Only SMSF accounts are prepared.) But you do have the added ASIC expense of setting up the company. Human trustees are free.
Six advantage of using Legal Consolidated to incorporate your SMSF Company:
- 94% of incorporations happen within 25 minutes of you building the document online
- Our lawyers personally vet the details before they are submitted to ASIC
- When required, we contact ASIC to confirm your company name. ASIC's working hours are 8:30 am to 7:00 pm (EST) Monday to Friday
- If your SMSF Company name is unavailable, we contact you by telephone and work with you to find one that is available
- You receive a secure, personalised email containing:
- our covering letter on law firm letterhead
- Certificate of Incorporation
- Company Constitution
- All minutes
- As always, our hints and training videos guide you. The law firm is available 24/7 by telephone for free legal advice on how to build your SMSF company online
For more legal advice telephone us. We are a law firm. We can help you answer the questions.
Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
Australia wide Superannuation law firm
Mobile: 0477 796 959
National: 1800 141 612