To be a director of a corporate trustee, or not to be: that is the question! An SMSF is a trust, that requires a trustee to be appointed. The trustee of an SMSF can be individuals or a company.
An SMSF can have up to six (6) fund members.
Prior to establishing your SMSF you must decide on a trustee structure. Each structure has different requirements, and these differences must be considered, you may consider SMSF professional advice prior to deciding.
An SMSF can have individual trustees or a corporate trustee,this is where a company acts as the trustee of the SMSF.
Individual Trustee Structure
· An SMSF that decides on an individual trustee structure and has only one (1) fund member:
- The fund member must be a trustee of the SMSF
- The SMSF must appoint an additional trustee of the SMSF, that is not a fund member, as an SMSF is unable to have one individual trustee. The fund member must select someone they trust and someone who understands their obligations and responsibilities as a trustee of an SMSF. This trustee becomes a non-member trustee of the SMSF
· An SMSF that decides on an individual trustee structure and has between two (2) to four (4) fund members:
- All fund members must be trustees
- All trustees must be members of the SMSF
- Fund members cannot be an employee of another fund member unless they are relatives
· An SMSF that decides on an individual trusteestructure and has between five (5) to six (6) fund members:
- All fund members must be trustees; however, the laws within most of the states within Australia only allow a trust to have a maximum of four individual trustees. As an SMSF is a type of trust a corporate trustee may be more appropriate in this situation.
Corporate Trustee Structure – establishing and maintaining a company to act as the corporate trustee of the SMSF costs, these costs must be considered.
· An SMSF that decides on corporate trustee structure and has only one (1) fund member:
- The fund member can be the sole director of the corporate trustee; or
- One of two directors of the corporate trustee,where the other director is a relative or the fund member is not an employee ofthe other director.
- All directors of the corporate trustee must havea director ID*.
· An SMSF that decides on a corporate trustee structure and has between two (2) to six (6) fund members:
- All fund members must be a director of the corporate trustee
- All directors must be a fund member of the SMSF
- All directors of the corporate trustee must have a director ID*.
*A director ID is a unique identifier that is given to a director that has verified their identify with Australian Business Registry Services (ABRS). A director can apply for a director ID online through the ABRS website, it only needs to be applied for once and you can keep it forever.
