Can I Use an Existing Company as My SMSF Trustee?

Technically yes, you can choose to use an existing company as your SMSF trustee. However, it is strongly advised against industry wide led by the SMSF Association due to the difficulties it can create for the fund longe term. Cost and convenience appear to be the main reasons for choosing an existing trading company or existing trustee company, but this can prove much more expensive in the long term. A special purpose company acting solely as the trustee of your SMSF has several advantages which we will explore in below.

Why use a Company as SMSF Trustee?

Generally, an SMSF member must also be an individual trustee or a director of the corporate trustee. Your SMSF trustee should be the legal owner of all SMSF assets, except property assets subject to a limited recourse borrowing arrangement (LRBA).

Now that an SMSF can have up to six members, it is administratively easier to apply for shares, managed funds, bank accounts and other assets in one name rather than six. Share registries generally allow only up to three individual names on the title. Most state and territory Trustee Acts allow only up to four individual trustees.

If a member decides to transfer all of their super to another complying fund, it is much simpler to remove a director of the corporate trustee than to resign as an individual trustee. When a trustee changes, the title to all of the fund’s bank accounts and assets must be amended to reflect the current individual trustees, whereas the title of fund assets remains in the name of the corporate trustee under the same circumstances.

If an SMSF trustee breaches the SIS laws, administration penalties for a single breach are imposed on each individual trustee. By contrast, the penalty is imposed on a corporate trustee but not on each individual director.

Having a corporate trustee means the central management and control rules are much easier to comply with when travelling for extended periods outside of Australia. It is possible to remove the member travelling overseas as a director and appoint the member’s attorney, based in Australia, as a director of the trustee until the member resumes their Australian residency.  There must be a pre-existing enduring power of attorney (EPOA) between the parties. Similarly, a member having an EPOA can mean the attorney can step in when a member loses legal, physical or mental capacity, and it is simpler with a corporate trustee in place.

Why set up a new special purpose company?

Separation of assets is clearer when a company, which must have a unique name, acts only on behalf of your SMSF. In states such as NSW, a property is legally registered in the name of the trustee and cannot be registered with the designation “as trustee for”. Thus, the property is immediately recognisable as an asset held by the SMSF where a special purpose company is used.

From a cost perspective it is negligible burden for the trustee with the annual ASIC fee for a special purpose trustee company is only $70 from 1 July 2026 compared to a proprietary company, which is $342.  The lodgement of the annual ASIC statement, registered office services and ASIC agent work is part of our SMSF Annual Package fees.

A new company has no history. It has no existing legal impediments. No hidden creditor lurking in the background. An existing company may have exposure to unforeseen legal action arising from past activities. Our SMSF setup fees of $2,000 (plus GST) include the incorporation of a new special purpose trustee company to act solely as the SMSF trustee.

Your trading company is exposed to a much higher level of commercial risk than an SMSF, which generally invests in low- to medium-risk passive assets. Having your trading company as the SMSF trustee exposes the SMSF to the risk of a claim over its assets arising from the trading company’s financial difficulties, as the trustee in bankruptcy will seek all available avenues of relief.

Having your trading company as the SMSF trustee can create issues in separating business and fund assets. Cash transactions could be compromised, with funds inadvertently withdrawn or deposited into the wrong account.

An existing trading company or a company trustee of a family discretionary trust or unit trust may have been established for estate planning or to enable the next generation to take over the business. This structure may be incompatible with serving as the trustee of the SMSF, as all members must also be the directors of the corporate trustee. To avoid conflicts with future plans, it is preferable to have a separate company trustee.

Can an existing company be converted to a special purpose company?

Yes, it generally can be. The company’s constitution may need to be amended to allow for this, and the appropriate paperwork lodged with ASIC. However, as it is an existing company, there still may be potential liability due to prior business dealings.