I have made it very clear for many years that I believe that it’s much better for a self-managed super fund to use a corporate trustee rather than individual trustees. Yes there is an initial set up fee of between $550 to $850 including and ASIC charge of $506 but that is a one-off and I would hope that ASIC in a move to promote use of Sole Purpose Corporate Trustees might reduce that fee. (wishful thinking maybe).
ASIC also charges these companies annual fees. They have two different charges for proprietary limited companies. One applies to companies that only perform a special purpose and another charge applies to all other companies.
Special-purpose companies include those whose sole function is to be the trustee of a super fund regulated under the laws. These types of super funds would include SMSFs.
Special-purpose companies are only charged an annual fee of $55 (up from $53 just last year – inflation!).
The annual fee for all other proprietary limited companies is $273. As an example, this higher fee applies to companies that at are a trustee of an SMSF and also trustee of your family’s discretionary trust.
Because people often use their Accountant or Administrator as a mailing address it can be easy for these annual fees to be missed or a delay to occur in notifying people to pay them . So for people who are a bit lax about checking emails or opening snail mail from their fund administrator it’s very easy to miss the deadline to pay these annual ASIC fees. 
If any company pays its annual ASIC fee more than a month late the late payment fee is $82 and if two months past the deadline date it will have to pay an additional $340.
I have a number of clients who have been caught in this trap and went looking for a solution. To avoid these penalties all annual ASIC fees can be paid 10 years in advance and obtain a decent discount and peace of mind that late fees are avoided.
For example, the fee for 10 years in advance for a super fund trustee company is $383, a discount of $167 on 10 years of the standard $55 annual fee for SMSF trustee companies. This discount is equivalent to a 30% discount per year. Sounds like a good deal for a forgetful, busy or even the prudent trustee.
The relevant instructions on how to pay and the require form are available here.
Note for Accountants and Administrators:
Best practice treatment of the payment is to amortise over 10 years.
In Class you can set it up as a Custom Holding asset (non-investment) and amortise 1/10th every 30 June (or company review date if that’s your preference).
in BGL SF360, you can use the existing 66000 Prepaid Expenses account in the Chart of Accounts or create a Custom Asset Account e.g. Prepaid ASIC Fees. Then amortise the ASIC fees over the prepaid period i.e 10 years. Users can refer to https://360help.com.au/x/NgNiAQ
In BGL SF360 as an extra time saver, use the SAVE & COPY function in the Journal Screen each year to copy the Journal. SF Desktop clients could use the Standing Journal function.
Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.
Liam Shorte B.Bus SSA™ AFP
Financial Planner & SMSF Specialist Advisor™
Tel: 02 98941844, Mobile: 0413 936 299
PO Box 6002 BHBC, Baulkham Hills NSW 2153
5/15 Terminus St. Castle Hill NSW 2154
Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572
This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
Edward
/ March 9, 2015Hi Liam,
My wife and I were individual trustees before changing to a corporate trustee in late 2012. From memory, the ASIC fee in establishing the company was approximately $430 or so (the fee today is $457 according to the ASIC website).
However, when I see the establishment of a corporate trustee by SMSF administrators and the like, I have seen quotes from $600 all the way up to $1,100, so for the sake of a bit of time, completing a form and dealing directly with ASIC, an engaged trustee can save anything up to $600-$700. If you need help with the form, one needs to just get on the phone to ASIC and be talked through it … just put the phone on speaker and do something else whilst you wait.
It’s much preferable that anyone contemplating a new SMSF starts with a corporate trustee with each member being a director. In our case, we had seven investments in listed securities so we had to pay our broker an off-market transfer fee of about $54 or so per security. With us fully understanding the benefits of a corporate trustee though, this was not a concern and we promptly paid it to ensure that legal title of the shares was changed from individual trustees to that of the corporate trustee. It’s important to note that whilst there’s a change in legal ownership, there’s no change in beneficial ownership and hence no CGT is applicable.
Of course, because we had a relatively small number of listed securities in the name of the fund where we had individual trustees, we declined to make any further investments until this change to a corporate trustee was completed. The obvious benefit is that if either my wife or I were to die, there doesn’t have to wholesale changes to the legal name of each investment simply because a trustee is removed and replaced with another individual (or a company).
Anyway, for us, it was well worth the time and the train ride into town to have the company established by ASIC in person. For those people outside of a capital city, it’s merely a matter of sending the form into ASIC with your cheque and waiting for the certificate to be mailed back to you. As well as the fund’s broker and the ATO, it’s also important to make the change with the fund’s bank so open a new account in the name of the corporate trustee ATF the fund.
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Edward
/ March 8, 2015Not only is the discount good, but one also postpones the regular annual increase in the annual fee for ten years. There’s no doubt at all having a corporate trustee with payments in advance every ten years is the way to go.
Something else I’m quite bemused by too is the set up cost for the special purpose company. I’ve not read it anywhere that a trustee can contact ASIC directly, fill out the paperwork and pay the fee, without the extra cost imposed by an adviser. Why pay up to $850 when a self-directed person can get away with paying the ASIC fee only? This is what I did:
1) I phoned ASIC for guidance on where to find the appropriate form on their website (caution though, much patience is needed getting through on the phone),
2) I completed the form and walked into the local ASIC office in my capital city (if one doesn’t live in a capital city, they can simply mail the form with a cheque for payment), and
3) I have the ASIC staff member print out the certificate for my newly registered special-purpose company on the spot (with all members of the fund listed as a director), however if you’ve mailed your payment and form, then you would need to wait for this to be mailed to you,
4) My wife and I complete the ‘Change of details for superannuation entities’ form and mail it back to the ATO to register the change from individual trustees to a corporate trusted.
Yes, there’s a little work involved, but it’s not difficult to avoid additional adviser fees if you really want to. An ASIC key and login is provided too so you can check your details online at any time.
Just my thoughts Liam. Regards.
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SMSF Coach - Liam Shorte
/ March 9, 2015Hi Edward
Great tip. Can you advise the actual costs incurred so people can see the saving. I always recommend people do what they can to save fees especially if they have the time.It improves their knowledge of the superannuation system and confidence in the strategies they are using.
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