Special Purpose SMSF Company – checked by our law firm

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• Special Purpose SMSF Company

• $687 incl. GST

• 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. You save on ASIC’s annual charge.
  
  We check your company registration. This is before it proceeds to ASIC.

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• ChecklistSample Document

SMSF company (SMSF corporate trustee)

Special Purpose company complies with ASIC and Superannuation rules

SMSF company as corporate trustee for your Self-Managed Super Fund

Build an SMSF company that acts solely as the trustee of your Self-Managed Super Fund (SMSF). Fully SIS Legislation compliant with Special Purpose Company rules.

The constitution prohibits distributing income and property to shareholders. It is ‘safer’ for your SMSF to have a Special Purpose company. You also save on ASIC’s annual charge.

We check your special purpose company registration. This is before it proceeds to ASIC for incorporation as a Special Purpose Company. It is fully SIS Legislation compliant.

Which is better as trustee of your SMSF: company vs human

When I started practising in superannuation law in the 1980s, the majority of SMSFs had just ‘dad’ as the trustee. In those days you only needed one trustee. Now all the members are trustees. Or all the members are directors of the SMSF corporate trustee. These days most superannuation lawyers, accountants and financial planners recommend a company as trustee of your SMSF. This is because:

1. An SMSF company lives forever. This is better succession planning. If a member dies, you don’t need to transfer land. The land just stays in the SMSF corporate trustee name. You update the directors only.
2. If Mum and Dad at the SMSF trustees you can change them only via a Deed. (You change trustees via a Deed of Variation of your SMSF.) In contrast, changing a director is simpler and less expensive. It is free and easy to just change an SMSF company director. (Changing a director of the company does not change the trustee.)
3. If ‘mum’ and ‘dad’ are the two individual trustees of the SMSF, there is a problem if one dies. An SMSF cannot have one human as a trustee. You need at least two humans. Act quickly when your spouse dies. Appoint another human as trustee or replace everyone with an SMSF company. The last thing you want to worry about is getting your SMSF compliant when a loved ones die. Legal Consolidated’s SMSF corporate trustees are compliant with just one director.
4. Ease of audit

   You can’t mix SMSF assets with your other assets. A dedicated SMSF special purpose company has no other job. When ‘mum’ and ‘dad’ buy an asset for the SMSF, they may forget to add ‘as trustee for the SMSF’. There is a breach. In contrast, if you buy an asset in the name of the SMSF special purpose company and forget to put ‘atf SMSF’, it is not 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.  You can sue an SMSF. If you have an SMSF company you have another layer of protection. A corporate trustee director does not automatically go down with the sinking trustee SMSF company.
6. Banks require SMSF to have an SMSF company as trustee for borrowing money. (They also require the trustee of the Custodian Agreement to also be an SMSF company.)
7. The ‘Central Management and control‘ rules are easier to comply with if you travel overseas.
8. ATO penalties are less with an SMSF special purpose company. Human trustees are jointly and severally liable.
9. An SMSF corporate trustee (special purpose company) pays lower ASIC fees each year.
10. An SMSF special-purpose company won’t have an ABN. It does not trade in its own right. Instead, the SMSF has the ABN.
11. An SMSF corporate trustee does not prepare accounts. It has no assets. Instead, the SMSF prepares accounts and pays tax.
12. Land tax. Land tax rates are progressive. The more land in any given entity then the higher the rate of law tax. 
13. One advantage of humans as trustees of an SMSF is that humans are free. An SMSF corporate trustee costs money to get. And then you have annual ASIC fees. You have the added ASIC expense of setting up the SMSF company. Human trustees are free.

Upgrade SMSF Deed rules and change the Trustee – at the same time

Q: My old SMSF Deed is 6 years old. And needs a Deed upgrade to a Legal Consolidated SMSF Deed. Also, the SMSF trustees are currently individuals. Can I update the Trustee and the Deed both at the same time?

A: Yes you can update the SMSF Deed and Trustee by this Deed of Variation to update Deed and change Trustees. It changes human trustees to your new company. And it upgrades your SMSF rules. Both at the same time.

(Only need to remove the human SMSF trustees and put in your new company? Build this Deed of Variation to update Trustee. However, even if your SMSF is new you should take the opportunity to upgrade it to a Legal Consolidated SMSF Deed.)

Seven advantages of using a law firm website to build your SMSF company

The 7 advantages of using Legal Consolidated:

1. 94% of special purpose company incorporations happen within 25 minutes of you building the document online
2. our lawyers personally vet the details before submitting to ASIC
3. when required, we contact ASIC to confirm your SMSF company name
4. what if your SMSF company name is unavailable or challenged by ASIC? We contact you via telephone and help you find one that is available
5. You receive a secure, personalised email containing:
   • our covering letter on law firm letterhead
   • Certificate of Incorporation of the SMSF special purpose company
   • SMSF Company Constitution
   • All minutes
6. as always, our hints and training videos guide you. The law firm is available 24/7 via telephone for legal advice on how to build your document
7. an SMSF company constitution is a deed. Only a law firm can legally prepare deeds.

For more legal advice telephone us. We are a law firm. We can help you answer the questions.

Adj Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
National Australia law firm
Mobile: 0477 796 959
National: 1800 141 612
Email: [email protected]