Understand the benefits of a Corporate Trustee

The benefits of having a Corporate Trustee for an SMSF fund are slowly being recognised by Trustees and Advisers however these is still some way to go.

Current ATO statistics show that almost 80% of new Funds being set up have a Corporate Trustee, and overall 57% of funds now have a Corporate Trustee – which is a big increase from ten years ago.

However, that still leaves a number of Funds that don’t have a Corporate Trustee i.e. 43% and many of these funds are older funds that were established some time ago.

Now that the ATO is able to issue administrative penalties to SMSF Trustee (since 2016), the benefits of Corporate Trustee are even greater.

The reason being that with a Corporate Trustee, the maximum penalty that can be issued to a Trustee is $12,600, however with individual Trustees this could be up to $50,400 (for four Members) and even more if there was six Members.

And given that the number of Audit Contravention Reports to the ATO continue to rise (about 14,000 in 2018, mainly due to Related Party Loans) it is likely that the administrative penalties issue by the ATO will rise as well.