Do I Need a Special Purpose Company for My SMSF?

You don’t legally need to appoint a special purpose company as the corporate trustee for your SMSF.  However, we highly recommend it to all our clients, and it is considered as industry standard.

What is a special purpose company?

It is a company established with ASIC for a specific purpose. An SMSF can elect a special-purpose company to act solely as the fund’s trustee. It cannot be used for any other purpose. When first setting up a company, you can register it as a special-purpose company. It must have a constitution and cannot use replaceable rules. Unlike a general-purpose company, the company’s constitution must prohibit it from distributing property or income to its shareholders. Because a special-purpose company doesn’t trade and has no assets, it doesn’t need an Australian Business Number (ABN) or a tax file number (TFN).

When we set up a new SMSF for you, the price includes setting up a special purpose corporate trustee.

Why choose a special purpose company as your SMSF trustee?

There are many reasons to choose a special purpose company as your SMSF trustee. The advantages include:

• keeping the fund’s assets separate from members’ personal or business assets
• reducing administrative burden when changing the title of fund assets, such as when a trustee/director changes (e.g. a member’s death, adding new members, splitting an SMSF due to a divorce, or a member developing dementia) – a company only needs to lodge paperwork to change the directors, but individual trustees must change the title of all assets, including all bank accounts and property titles
• being able to have a single member fund as a member can also be a sole director of a special purpose company that acts as the fund’s trustee but cannot be a single individual trustee
• some state trustee legislation limits the number of individual trustees to four, and therefore, in states like NSW and Victoria, an SMSF must have a corporate trustee when the members exceed four
• administration penalties issued by the ATO are applied to each individual trustee, but not to each director of a corporate trustee (only the company itself)
• additional protection of fund assets as if a trading company also acting as the fund’s trustee is subject to bankruptcy or caught up in a legal matter, the fund’s assets may be at risk, whereas using a special purpose company there is no prior history.

Often, people elect individual trustees to minimise upfront and ongoing costs, and it seems simple until something goes wrong. When a fund has individual trustees, it is much harder to ensure all transactions are recorded correctly when they also hold assets in various structures and personally outside the fund. For example, in NSW, the SMSF trustee must legally hold property title in their own name, not in the SMSF’s name. For example, Fred and Rita Jones hold property personally and also on behalf of their SMSF as individual trustees.  The legal title is the same for personal and fund property.  A special purpose company can legally hold the property title, and it is clear to the auditor and all other parties that the property is held on behalf of the SMSF, as the company cannot act in any other capacity.

Can I change my existing company to a special purpose SMSF trustee?

You can convert an existing company into a special purpose company and have it act as the SMSF trustee. The company’s constitution needs to be reviewed and, if permitted, amended to prohibit the distribution of income or capital to shareholders.

A ‘Form 484 – Change to company details’ must be completed and lodged with ASIC to advise them of the company’s change of status to a special purpose company acting solely as an SMSF trustee. However, ensure no assets remain in the old company before converting it, and that there are no potential legal disputes.

Why is choosing a trading company as your SMSF trustee a bad idea?

A member may have an existing trading company that they want to act as the SMSF trustee. There are a number of reasons why this is a bad idea, such as:

• Generally, all members of an SMSF are also directors of the corporate trustee. In a trading company, a director may need to be appointed for various reasons, such as managing the business and succession planning, but they may not also be fund members.
• Clear title to fund assets may be compromised with the risk of commingling the business assets and fund assets when the legal entity is the same.
• Legal disputes in the trading company may put the fund’s assets at risk. A creditor will likely involve all assets owned by the company in its dispute.

What are the annual compliance requirements?

ASIC sends an annual statement after the anniversary of the company’s set-up, including details of the officeholders (directors) and their addresses, the company’s registered address (for our clients, this is our company address), the principal place of business (generally the member’s address), the share structure, and the members (shareholders). You must review the information and, if correct, pay the annual fee within 2 months of the review date. If any details are incorrect, you must notify ASIC within 28 days of the issue date.

Annual fees for a special-purpose company are considerably lower than those for a general-purpose company. The annual fee for a special-purpose company is $70 for the 2026/27 year, compared with $342 for a general-purpose company.

Most accountants charge an additional fee to manage the annual ASIC compliance requirements, but we include this in our annual compliance fees. For our clients, we act as the company’s registered ASIC agent. We receive the notification for your annual statement and ensure it is sent to you for review and payment of the annual fee. The company directors must also pass a solvency resolution within 2 months of the annual review date. We do not lodge either the annual statement or the solvency resolution with ASIC; we keep them in the company’s records. We update ASIC electronically whenever the company’s details change.

What penalties apply if I pay my annual fee late or notify ASIC of changes late?

ASIC penalties include:

• automatic late payment penalties of $102 for payment up to one month late and $428 for more than one month late
• similar late payment penalties also apply if you don’t notify ASIC of changes within 28 days of the issue of the annual statement
• in addition, similar fees apply to late notification of company details

Penalties could potentially cost $306 under the following scenario;

The issue date of the annual ASIC statement is 10 July 2026, and the fee is paid on 18 September 2026 – more than 2 months after the review date. Fred transferred all of his super to another complying fund and resigned as a director of the corporate trustee on 8 July 2026. The change in directors was notified to ASIC on 20 August 2026.

Penalties	Amount
Late payment of the annual review fee	$102
Late payment fees for updating annual review details	$102
Late notification of change to directors	$102
Total penalties incurred	$306

What happens if I don’t pay the annual ASIC fee?

ASIC may deregister a company if annual review fees are not paid within 12 months of the payment due date. The consequences for an SMSF can be catastrophic and include:

• the company ceases to exist, and the fund assets cannot be dealt with by the current members
• the fund’s assets vest in the Commonwealth
• to access the fund’s cash requires an application under ASIC’s Unclaimed Monies Account
• the fund cannot accept employer contributions, rollovers and receive concessional tax treatment

Reinstating the company may be possible, but it is costly and time-consuming. The fund assets would then need to be reclaimed.

Paying annual ASIC fees 10 years in advance

An SMSF corporate trustee may be able to pay the annual fee 10 years in advance at a discounted rate and avoid future fee increases. A special purpose trustee company can elect to pay $482 (from 1 July 2026), which must be lodged with the “ten-year advance payment of annual review fee – remittance advice”.

However, if the company closes within 10 years, no refund is provided, and the obligations to review company details, advise ASIC of any changes, and ensure the directors pass an annual solvency resolution remain.