Changing SMSF to a corporate trustee.

We set up our SMSF many years ago and my wife and I are the trustees. We have been told on many occasions that we should change to a corporate trustee. My accountant has given me a price and I am gobsmacked at the cost. If anyone has done this can they let me know how much they paid. Thanks.

 

it will depend on what that price includes and what the trust holds
it could be just a few hundred dollars plus the company set up to many thousands

 

Many legacy smsfs have individual trustees most due to the fact that they received poor advice from accountants or just didn't want to fork out for the cost of a company which would have been more in those days. Generally accountants will say they offered it but the trustee but they did not want to pay.... whereas the trustees will say they were not told, in any case its a easy fix and worth the cost.

Yes, there are many benefits of conversion to corporate and lots of information as to the benefits of corporate trustee. We never set up with individual trustee, always corporate.

To convert, you will need a company and "change of trustee" deed and the cost of this will vary from providers. Further the ownership of assets will need to reflect the new trustee such as bank account, property shares etc and a change of details form will need to be completed with the ATO. Its not simple however should be $1500-2000 depending on the accountant.

It gets messy with HINS so if you have alot of shares be aware of this.

Hope that helps

Cheers Ivan

 

If a borrowing is being expored the cost likely includes
1. Cost to amend the deed by replacement and
2. A company
3. Deed concerning change of trustee

A Deed of replacement will avert a issue when a bank or lenders asks for the deed and insists the members / trustee are changed if they are different now to the original deed. If members are being changed definately seek legal advice as it can trigger a property duty issue sometimes

The cost to change from individuals to company is typically $1500 and more. I have also seen soliictors charge much more. The deed provider may even be a wise cost effective place to enquire. And as Ivan points out then there are loads of other issues which can mean changing HINs and legal title with registries for a fee and also changing bank accounts etc is all required. All investments must be in the new trustee name and the audior could find issue if thats not corrected promptly. If real property is owned consider legal and government costs for title change too. That isnt dutiable UNLESS there are additional members.

I never recommend human trustees for a smsf for these reasons...and several others.

 

I am in the process of doing this
I only have shares so hopefully it wont be too hard, I am a comsec one client and they told me I can transfer share holding to another name without incur any cost that they normally charge non comsec one client

 

I complete this process cost all up $800 for me, mostly paperwork and registered a new company, share transfer fee free as I am a comsec one client else it would cost several thousand here

 

The failure to amend the deed, obtain fresh trustee declarations, update the Australian Business Register etc can all impact later. Auditor is often first to ask and then the investment strategy must have been redone at the time of the change !! and so on. Pension agreements and death benefit noms too. New bank account/s....PITA. Mere formation of a company is a small element. I saw a few people in the past year who DIY'd that and set up their own company online with business.gov.au and totally stuffed it. I dont assist these as its a complex legal mess and I am not a solicitor. A company without rules and share class explanations etc. Often with a trust deed that specifies a different trustee or even different members.

Penalty for breach of SISA is one the trustee Directors may personally bear or just ATO sanctioned re-education etc

 

Why would the deed need amending?

 

Many banks throw this one at some funds. The deed contains say two trustee members and then is amended and there are three due to a new member. Or the original deed has human trustees and then a deed of amendment occurs to vary the deed for a company. Bank wants one of those two alternatives for bank accounts etc. Also occurs in many cases when a self formed smsf with human trustees is created. Then they seek borrowings. lenders wants a company. It is suprisingly common and very annoying. Costly to fix what could have been avoided.

IMO a asic search to show members = trustees should be allowed but...not for most banks.

 

To appoint a new trustee?

 

And I'm curious to know what you thought it would cost v what's included in the quote?
You should be able to do some of what is required yourself, depends if that's included in the quote.

 

that is not how it is done!

 

Done by SMSF minutes after getting written consent from nominated Director and then advising ASIC of change in company details. At least that's how I remember it being done.

 

Could be $100 or could be $550. I have seen cases of each. There is no consistency. I do preer cerain deeds which allow a matched update or upgrade or even a change that is simple. But then I would never recommend a setup with individual sas trustee fund. I wont do it. There isnt a case for it being sound advice. It always bites someone later eg on a member joining fund, leaving fund or even dying, a borrowing and even some specific investmnets may need a corporate trustee etc To me, a warning bell for smsf advice is when a client chases the cheapest option. They probbaly arent listening and are only focussed on cost.

 

Deed of appointment - do you not consider this an amending deed?

 

Not usually. What does the DEED say the process is ? A "change"of trustee may need consents too. Some aweful deeds even ask for employer consent. Thats a sign of a need to consider upgrade of the whole of the deed. But then what about death nominations, revresionary pensions and even assets title and insrances ? Bank accounts etc The ABR needs to be updated too !!!! Now with rollovers through superstream this is a vital step. In the past it wasnt critical.

 

Change of Trustee | Leading SMSF Law Firm

"Previously, many people considered a change of trustee a simple exercise that was done by trustee minutes. However, the relevant provisions of the Superannuation Industry (Supervision) Act 1993 (Cth) (‘SISA’) have increased the complexity."

 

Well, it was done some years ago and ASIC was happy enough. No longer my issue really as I am no longer a Director of the relevant entity.

 

Should have mentioned that was a TT. For the SMSF it was done according to the legislation via DB Law.

 

no