Key Duties and Obligations of SMSF Trustee Structures
The most important trustee obligations are ensuring they act honestly and manage the fund separately to their own individual superannuation member balance.
Trustee declaration
A new trustee is required to complete a trustee declaration within 21 days of being appointed. The ATO form must be signed and dated by the individual trustees or a company trustee to declare they fully understand their obligations and responsibilities of being a trustee.
SMSFs sole purpose test
The trustee must ensure the SMSF is run for the sole purpose of providing retirement benefits to the members (or beneficiaries if the member dies before they retire).
Example – Bob’s SMSF purchased a painting for $20,000 and Bob decided to hang the painting on his bedroom wall at his home. Bob as trustee of his fund has not maintained the fund for the sole purpose of the members’ retirement. The purpose of purchasing the painting was for his own personal benefit and therefore the trustee has breached the sole purpose test.
Appoint an auditor
The trustees need to appoint an independent auditor to audit the financial statements of the fund.
The SMSF undergoes an annual audit where the trustee must ensure that financial statements are prepared. The trustee must provide all necessary documentation to the auditor to facilitate their independent audit report. It is crucial for the trustee to maintain up-to-date records that accurately reflect the fund’s decisions.
Keep member and trustee records
The roles and responsibilities of the trustee include updating changes to the members and trustees and ensuring the ATO and ASIC are notified. Maintaining and keeping records such as trustee minutes, changes to the trustees and trust deed, annual financial statements and written consents and declarations for members and trustees. The records are required to be kept for between 5 -10 years.
Superannuation fund assets to be kept separate
A trustee must ensure the SMSF, and its assets are kept separate to the trustee’s own personal assets.
SMSFs investment strategy
The trustee must formally prepare and implement an investment strategy which must be regularly updated and reviewed.
Remuneration of trustees
Trustees of SMSFS are prohibited from being remunerated for any duties or services performed in their capacity as trustee of the fund. Directors of corporate trustees are also unable to be remunerated in relation to them carrying out the duties or services performed.
Accepting contributions and paying benefits
The individual trustees or directors of a corporate trustee are required to ensure contributions are only accepted for members of the fund in accordance with the superannuation laws and the trust deed. The trustees will also ensure payment of benefits are made to members in accordance with the superannuation laws and trust deed.
Types of SMSF Trustees: Individual Trustee vs Company Trustee (Corporate Trustee)
Individual Trustee
An individual trustee is a person who is at least 18 or over, not be unfit or incapable of acting and not be a “disqualified person”.
Essentially a disqualified person includes an undischarged bankrupt, disqualified by the Australian Taxation Office (ATO), convicted of an offence involving dishonesty such as theft or being fraudulent. Penalties on SMSF trustees are imposed if an individual acts as a SMSF trustee whilst being a disqualified person.
All members must be a trustee. A trustee is not necessarily a member.
An SMSF can accommodate up to 6 members, meaning that an SMSF with individual trustees can have a maximum of 6 individual trustees. The situation is slightly different for a single-member SMSF, as it cannot have a single member with a single individual trustee.
For a one-member SMSF, two trustees are required. The second trustee does not necessarily have to be a member. However, the member cannot be employed by the second trustee unless they are related. Thus a friend or other acquaintance could be the 2nd trustee provided, of course, the member is not employed by the friend.
Warning –The Trustee Acts for NSW, Queensland, Victoria, Western Australia and the ACT only allow a maximum of 4 individual trustees. A SMSF can have a maximum of 6 members. Thus, if a fund has more than 4 members it has to appoint a corporate trustee.
There are a few rare exceptions such as when a member is under 18 or on death when a legal personal representative steps in on behalf of the deceased member but is already an existing member and trustee of the SMSF. Under these circumstances it is possible to have one individual trustee and possibly one or two members.
Example – Henry and Ida Foster are the members and individual trustees of the H & I Superannuation Fund. Henry unfortunately passed away. Ida was Henry’s legal personal representative. On Henry’s death Ida stepped into his shoes as trustee of the SMSF. As Ida was already a trustee she continues as a trustee but in addition makes decisions on behalf of Henry. Ida can continue as the individual trustee until the death benefits begin to be paid out. After this she has 6 months to change the trustee to a corporate trustee or add in a 2nd individual trustee. All decisions should be formally documented after careful consideration of the circumstances.
Company Trustee (Corporate Trustee)
A company trustee is a company which is regulated by the Australian Securities and Investments Commission (ASIC).
An SMSF trustee can either be an established company that is commonly involved in the family business or a corporate trustee for a unit or discretionary trust. Alternatively, a sole purpose corporate trustee can be created specifically to act as the corporate trustee for an SMSF.
The cost of establishing the company is a one-off cost which varies but can be around $1,000.
All members must be directors of the company trustee.
Similar to an individual trustee, a director must be at least 18 years old and not be unfit or incapable of acting and not be a “disqualified person” (refer to definition above).
In addition, a company is not permitted to act as a trustee in certain situations which include:
- the company is in liquidation
- the company is being wound up
- a receiver or administrator has been appointed
Example – Fred & Beryl Brown Super Fund have a company trustee, FBB Pty Ltd. Both members are the directors of the trustee. However, Fred and Beryl decided to lodge the annual ASIC return themselves. They moved and did not provide a forwarding address to ASIC. As a result, the annual fees were forgotten and not paid. ASIC wound up FBB Pty Ltd which could no longer act as trustee of their SMSF.
An individual can act as both the sole member of a self-managed super fund (SMSF) and the sole director of the company trustee.
Since a SMSF can only have up to 6 members, the maximum number of directors allowed for a trustee company is also 6.
Similar to individual trustees there are a few rare exceptions such as when a member is under 18 or on death when a legal personal representative steps in on behalf of the deceased member but is already an existing member and director of the company trustee.
Why Set up an SMSF Trustee Company Vs an Individual Trustee Structure?
We recommend a sole purpose corporate Trustee as being best practice.
While having individual trustees for an SMSF may be simpler and cheaper initially, in the long term, having a special purpose trustee company is usually more advantageous and could potentially save money.
It is best to avoid using an existing family company to act as a trustee in case of litigation which may expose the assets held in the name of the company on account of the SMSF.
The regulations for superannuation mandate that every director of a SMSF company trustee must also be a member of the SMSF. This poses an issue when utilising a family-owned company that has additional family directors who are not members of the SMSF.
Interestingly, according to ATO records for 2022, the majority of SMSFs have opted for corporate trustees. Newcomers to the SMSF industry are choosing to set up a fund with a corporate trustee structure over individual trustees.
Corporate Trustee
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Individual Trustee
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| 6 member funds |
4 member funds |
| Must have a corporate trustee if in NSW, Qld, Vic, WA and the ACT as the Trustee Act does not allow more than 4 individual trustees. |
Limited to 4 members in most states due to the Trustee Act. |
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| Single member SMSF |
Single member SMSF |
| A single member can also be the sole director of the SMSF trustee. |
Must have 2 individual trustees. |
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| ATO Penalties |
ATO Penalties |
| Penalties imposed in relation to breaches of the Superannuation Laws and Regulations are only imposed once on a corporate trustee. |
Penalties imposed in relation to breaches of the Superannuation Laws and Regulations are imposed on each trustee which could be up to a multiple of 6 where a fund has the maximum number of individual trustees (practically speaking this would be a multiple of 4 times as most states limit the number of individual trustees to 4). |
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| Asset Protection |
Asset Protection |
| Companies have a legal life which can limit the possible damages to the fund’s assets and not expose the directors personal assets if a third party sues the SMSF trustee. |
If an individual trustee is sued their own personal assets can be at risk. |
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| Member Changes |
Member Changes |
| A company enjoys continuous succession which is an advantage when a member dies, marriage split up, incapacity of a member. Whilst changes may need to be done to the director no changes are required to be made to the title of the SMSF assets including bank accounts, properties, shares, managed funds etc. |
Any member resignation or addition requires a mirror change to the trustees. On the death of a member, or other member change, all of the assets owned by the fund must be updated to reflect the change to the trustees. The administration and costs involved can be significant. Often the bank account needs to be closed and a new bank account opened which means any direct credits or debits already set up would need to be changed. This could potentially impact the receipt of dividends, trust distributions and regular payments such as insurance premiums. |
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| Title of Assets |
Title of Assets |
| Recording an asset in the name of the trustee company is much simpler. |
If you have 3 or more individual trustees it is difficult to fit in all of the names on the title and in some situations, such as share registries, only 3 individual trustees can be recorded. |
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| Limited Recourse Borrowing Arrangements (LRBA) |
Limited Recourse Borrowing Arrangements (LRBA) |
| Most banks will only lend to a corporate trustee. |
A loan may be more difficult to source when the trustees are individuals. |
How to Appoint SMSFs Trustees
The trustee of an SMSF must be appointed in accordance with the fund’s trust deed.
Generally, a SMSF will appoint your trustees as follows:
- review the trust deed
- choose if the SMSF with individual trustees would be a better fit or if a corporate trustee of an SMSF would be a better fit
- decide if an SMSF with a corporate trustee should be a sole purpose trustee or use an existing related company
- have the trustees sign the ATO declaration
- minute the decision made by the trustees
- organise a trust deed for appointment and removal of a trustee
- ensure required consents and declarations are prepared and executed
- update the investment strategy
- update the Australian Business Register with the change to trustee details
- if required update the title of all of the fund’s assets
How to Remove SMSFs Trustees
The trustee of an SMSF must be removed in accordance with the fund’s trust deed.
Generally, a SMSF will remove your trustees as follows:
- review the trust deed
- minute the decision made by the trustees
- organise a trust deed for appointment and removal of a trustee
- ensure required consents and declarations are prepared and executed
- update the investment strategy
- update the Australian Business Register with the change to trustee details
Sole Purpose Corporate Trustee
A SMSF sole purpose corporate trustee acts solely as a trustee of a superannuation fund.
The company’s constitution must prohibit the company from distributing income or property to its members. The appropriate form must be lodged with ASIC to register it as a sole purpose company as trustee of a superannuation fund.
A sole purpose corporate trustee is required to lodge an annual return. The annual ASIC fee is $342. However, the ASIC annual review fee is discounted for a sole purpose corporate trustee. The fee payable to ASIC is $70 for 2026 financial year provided the trustee company only acts as trustee for a SMSF and it does not act in any other capacity. If the trustees outsource the ASIC review a self managed super fund may have to pay an administration fee to have the return lodged and to update ASIC for any changes to the company’s details such as change in directors and addresses.
N.B Your SMSF specialist will ensure the annual ASIC return is lodged on a timely basis and ensure changes are notified to ASIC when required.
Single Member Superannuation Fund
Single member SMSFS must either have two individual trustees or a corporate trustee with a single director or two directors.
Single Member and Single Director Company Trustee
A single member fund can have a single member fund with a single director company which acts as the trustee of the fund.
The same person will be the single individual member of the super fund and also be appointed as the single director of the company which will act as trustee of the SMSF.
This structure is particularly attractive as it gives full control to the single member.
Single Member and Company Trustee with Two Directors
A single member fund can elect to have a corporate trustee with two directors. The single member cannot be employed by the second director of the corporate trustee, unless they are related.
Single Member and a Second Individual Trustee
A single member fund can alternatively elect to have two individual trustees. The single member cannot be employed by the second trustee unless they are a relative.
Example – Fred wants to set up a new self-managed super fund with him being the Single member with his friend Tom being the 2nd individual trustee. Tom is not related to Fred but is a director of IT Technologies Pty Ltd which employs Fred as a technician. Tom cannot be the 2nd trustee as Fred is his employee.
If Fred was not employed by IT Technologies Pty Ltd Tom could be the 2nd trustee.
Frequently Asked Questions
Can I make a change of trustee from my current SMSF structure which was set up with individual trustees to a corporate trustee?
Response – Yes – refer to the removal and appointment of a new trustee to an SMSF (refer above)
Do I have to apply for a director ID when setting up a trustee company?
Response – Yes when a new company is set up you must apply to the Australian Business Registry Services.
A unique identifier is assigned to you for your lifetime regardless if you cease to be a director. Please refer to the following link for details of the application process.
Director identification number | Australian Business Registry Services (ABRS)
If I have 4 individual trustees do I have to include all 4 names in the title of the asset?
Response – Yes all 4 individual trustees are required to be included in the title. However, share registries, usually, do not allow more than 3 trustees to be added to the title. Executing a declaration of trust in favour of the SMSF may be possible to overcome this issue but be careful the wording does not cause a stamp duty issue. The trustee should seek legal advice to ensure ad valorem duty will not apply.
Key Takeaways
- When you establish an SMSF consider if the trustee should be an individual or a corporate trustee
- Consider using a sole purpose corporate trustee
- If establishing a SMSF with 6 members, consider using a sole purpose corporate trustee
- Ensure the key objectives and responsibilities are met
- Review the options for a single member SMSF
- Avoid using the family company as the corporate trustee
- Adding or removing a trustee means all of the fund’s assets and bank accounts need to be updated
- Adding or removing a member will result in adding or removing individual trustees
- Adding or removing a member will not result in adding or removing a corporate trustee
- Ensure changes to the trustee are lodged with ASIC if it relates to a corporate trustee
- Ensure changes to the trustee (regardless of the trustees are individuals or a company) or members are lodged with the Australian Business Register
- Any changes should be recorded in a trustee minute and retained for 10 years
Do you need help with SMSF Trustees?
Give us a call on 1300 392 544 or get in touch online.
A SMSF Trustee is a trustee of a self-managed superannuation fund who is a person or a company that operates and manages the fund for the benefit of the members, and beneficiaries, for their retirement.