When establishing a Self-Managed Super Fund (SMSF), one of the first structural decisions is whether to use individual trustees or a corporate trustee (a company acting as trustee). This choice has long-term legal, administrative, and practical consequences.
Individual Trustee Structure
In an individual trustee SMSF:
- Each member of the SMSF must be a trustee
- Each trustee must be an individual person (not a company)
- A sole-member SMSF must have two individual trustees
Cost to establish: No additional setup cost — no company required.
Corporate Trustee Structure
In a corporate trustee SMSF:
- A company (special-purpose trustee company) acts as the trustee
- Each member must be a director of the company
- A sole-member SMSF can have a corporate trustee with just one director
Cost to establish: ASIC registration and ongoing annual review fee (~$59/year for special-purpose company in FY2024–25).
Comparison
| Feature | Individual trustees | Corporate trustee |
|---|---|---|
| Setup cost | None | ~$500–$1,000 (company registration + professional fees) |
| Ongoing ASIC fee | None | ~$59/year |
| Asset ownership | Assets held in all trustees’ names — must update when trustees change | Assets held in company name — no change needed when directors change |
| Membership changes | Each change requires updating all asset registrations (bank accounts, property titles, share registries) | Simply update the company directors |
| Death of a member | Assets may need retitling immediately | No retitling required — company continues as trustee |
| Penalties | Penalties applied to each individual trustee | Single penalty to the company |
| Limited liability | No — individual trustees are personally liable | Company provides some separation (though ATO can pierce in cases of misconduct) |
| Sole member SMSF | Requires a second individual trustee | Can operate with one director |
| Professionalism | Less formal | More formal governance structure |
The Asset Retitling Problem With Individual Trustees
The most significant operational burden of individual trustees is asset retitling. All SMSF assets must be held in the names of all trustees on behalf of the fund. When a trustee changes (member leaves, dies, joins), every asset must be retitled:
- Bank accounts must be updated
- Property titles must be changed (with associated costs — transfer fees, conveyancing)
- Share registry records must be updated
With a corporate trustee, the company name never changes — only the directors need updating with ASIC, which is an internal record change.
Who Should Use a Corporate Trustee?
Corporate trustee is generally recommended for:
- Funds with property assets (avoids expensive retitling on member changes)
- Sole-member SMSFs
- Funds expected to have member changes over time
- Funds wanting cleaner separation between personal and fund assets
Individual trustees may be acceptable for:
- Simple, stable SMSFs with no property and no expected membership changes
- Members comfortable with the administrative burden
ATO Recommendation
The ATO and most SMSF advisers recommend a corporate trustee structure for its long-term administrative simplicity and clear separation of fund and personal assets — despite the additional upfront cost.
For more: SMSF Guide, SMSF Annual Return, Winding Up an SMSF. For advice on SMSF structure, speak with a licensed SMSF specialist. Find an adviser via MoneySmart.