You should have a sole purpose corporate SMSF trustee

Discussion in 'Accounting & Tax' started by Nodrog, 9th Feb, 2017.

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  1. Nodrog

    Nodrog Well-Known Member

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  2. Ross Forrester

    Ross Forrester Well-Known Member

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  3. kierank

    kierank Well-Known Member

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    I thought everyone had a corporate trustee for their SMSF.

    Silly me!!!
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Amazing that the majority don't. I can't understand why this is the case.
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Human SMSF trustees can be VERY dangerous. Its very short term thinking and belies the nature of a SMSF and its longevity. There are many more issues that DBA didnt also mention.

    There can also be some extremely serious control issue in case of illness and ageing. Even a simple matter like a death - No will ? So who controls the SMSF ? Public Trustee....That will cost far more than a company.

    Saving money to establish a SMSF is a trap.You can get what you pay for and pay loads more later.

    A simple matter of opening a new bank account can also be impacted. The bank asks for the deed - It shows one trustee / one member but fund has two trustees or members now. They WONT open a bank account and may freeze the existing account. So a costly amendment of the deed is required to support the two members or two trustees. Bank freezes the old account (I kid you not) and then after a mess you get new online babnking access and have a new account which means updating share registries etc..... They charge $40 a change too for the name changes. And so on.

    I see more audit and admin concerns with human trustee funds than corporate trustees. I believe the individuals more often take a different approach when they commence by cutting corners.

    Using a company means nothing changes other than advising ASIC etc of new directors etc.
     
  6. Redwood

    Redwood Well-Known Member

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    Here is an article I wrote for SMSF Adviser.
    Encouraging clients to establish corporate trustees

    I don't do individual trustee set ups - 95% of my clients buy property and a corporate trustee is a must. I lose a significant portion of the market who choose online providers however i'm interested in quality not quantity.

    Note - the article above is linked to SMSF adviser not Redwood.

    Cheers Ivan
     
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  7. Daniel Taborsky

    Daniel Taborsky Well-Known Member

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    I have clients who had a SMSF with human trustees. The fund has now been wound up but prior to being wound up the ATO issued the fund a notice of non-compliance going back multiple years for multiple breaches. This has resulted in the fund having a $400,000 tax liability. The assets of the fund were basically worthless when the fund was wound up so the debt to the ATO could not be paid from the fund's assets.

    As the trustees were humans the ATO can go after their personal assets to recover the tax liability. If they had a corporate trustee (with limited liability) the situation wouldn't be nearly as bad.

    Asset protection is a real thing with SMSFs.
     
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