Choosing between an individual and a corporate trustee is an important decision that arises when establishing an SMSF.
Despite this decision’s significance, many SMSF members often appoint trustees
without understanding the difference between the two.
It is important for SMSF members to understand the advantages and disadvantages
of appointing an individual or corporate trustee. Although appointing an individual
trustee is considered to be the cheap and easier option (that many SMSF members
choose), this option can often prove to be a false economy.
Here are some of the benefits SMSF members can enjoy when choosing a corporate trustee.
No immediate problems will arise if there is a death of a member in a fund with a corporate trustee. This differs from when an individual trustee dies since immediate action needs to be taken to ensure that the individual trustee’s SMSF doesn’t lose its tax concessional status. Having a corporate trustee also helps when handling member incapacity or divorce situations.
The admittance of new members to the fund (such as children) and the acquisition or
disposal of assets is much simpler with a corporate trustee. The legal ownership of the
fund’s assets also doesn’t need to be changed every time a member joins or leaves the fund.
Only one penalty applies to a fund with a corporate trustee under the new penalty regime for SMSFs. Individual trustees are penalised personally, and since there cannot be less than two individual trustees in an SMSF, an SMSF with individual trustees receives at least double the penalty rate.
Start to take control of your SMSF and call Lee and Lee today. We are here to help. We are SMSF Specialist Accountant and members of the SMSF Association.
Susan Flux, Brisbane
Since that time I known Tony and his team at Lee and Lee, they have provided me with outstanding advice and services regarding my personal, family and especially my SMSF borrowing setup for wealth creation and tax reduction strategies that have since led to financial independence.
I now very clear and feel confident on my future financial goals and taxation strategies and know they can be achieved with Tony's expert and professional help.
Shukri Barbara, Property Tax Specialists Sydney
Tony has impressed me with his technical knowledge and execution. He works with honesty and integrity and is generous in his dealings.
John Mu, Internet Marketing Strategist Gold Coast
Tony has the strategies which are helping me legally minimise tax. He has helped me in my personal development and wealth creation to build a multimillion dollar property portfolio.
If you want a hands-on accountant who knows his stuff...Tony Lee is the man!