Hi Terry, are you saying that its better to structure a company as a trustee of a SMSF rather than an individual?
If so, could you explain the reasoning why?? Sorry I'm very new to financial stuff.
A Corporate Trustee is always
- Easy to add / remove a Director by making company changes using a Form 484. Human Trustees would need to change every bank account and investment into the names of each trustee AND also show that the interest is a SMSF one. In a portfolio of shares this means a new HIN - Fees to change etc.
- ATO penalties. Worst ATO penalty is gaol. A Human Trustee. A Director of a Corporate Trustee wont get this penalty.
- Succession planning
- Borrowing for a SMSF human trustee may be governed by consumer credit laws where a corporate trustee is not.
- Issues with a sole member fund. A sole member with human trustee is not permitted. A sole member with corporate trustee is.
- A human trustee needs no guarantee as they sign for the loan as the borrower and the trustee in a single capacity. That's dangerous. Many lenders don't allow it for that reason.
I don't form SMSFs with human trustees. Its bad advice.