A self managed super fund (SMSF) is limited to four members. It can provide the members with greater control over their super fund assets. SMSFs are regulated by the Australian Taxation Office.
A SMSF is suitable for:
- High net worth individuals
- Family members
- Those who have already accumulated at least $250,000 in superannuation
Who can be the trustee of a SMSF?
- All the members of a SMSF must be a trustee.
- The trustee can be the individual members or a company where all members must be directors of the trustee company.
EXCEPTION Single member funds
- If the fund has only ONE member the trustee may be a "single director" company with the member as the single director. Alternatively, the trustee company may have a maximum or two directors (including the member). If the fund has only ONE member and the trustee is NOT a company there MUST be one other individual trustee. The other director or other individual trustee can be a relative OR any other person who is not an employer of the member.
Corporate vs. Individuals
Company as trustee:
- Cost - Need to establish a company
- Change of membership - Trustee can operate as a sole director company or add new directors / members without the need to change name of investments holdings
- Administration - Less work required if a member / trustee leaves the fund as investment records remain unchanged
Individual as trustee:
- Cost - No additional cost incurred
- Change of membership - Must maintain a minimum of two trustees and will require a replacement trustee should a member die or leave the fund through divorce
- Administration - If a member / trustee leaves the fund, investment records need to be changed to reflect the new trustee composition
Who CANNOT be a member / trustee of a SMSF?
The Superannuation Industry (Supervision) Act 1993 provides that the following persons are DISQUALIFIED from acting as an individual trustee or a director of a corporate trustee:
- Persons who have prior convictions involving dishonest conduct, wherever or whenever such conviction may have occurred.
- Persons who are insolvent, bankrupt, or have entered into arrangements, assignments or compositions with creditors under Part X of the Bankruptcy Act 1966 (Cth) or a similar foreign law.
- Persons in relation to whom a civil penalty order has been made under theSuperannuation Industry (Supervision) Act 1993.
- Persons expressly declared not to be "fit and proper" persons under section 120A(3) of the Superannuation Industry (Supervision) Act 1993.
View SMSF fees involved with administration & fund management.