The SMSF Association has outlined the serious consequences directors of a corporate trustee may face should the company involved be deregistered.
SMSF Association technical manager Fabian Bussoletti pointed out having a company acting as the corporate trustee of an SMSF deregistered means the fund will no longer have a trustee.
“Where the corporate trustee of an SMSF is deregistered by ASIC (Australian Securities and Investments Commission), the company ceases to exist as a legal entity and can no longer do anything in its own right. Further, the company’s now former directors will no longer have the right to deal with fund assets,” Bussoletti noted in a blog post.
“[Also] SMSF assets (held by the corporate trustee) will vest in the commonwealth (represented by ASIC).”
In addition, he warned the situation would mean any funds held in the SMSF bank account would have to be lodged with the ASIC unclaimed monies account and the SMSF will no longer be able to accept any contributions or member benefit rollovers.
“While it may be possible to subsequently reinstate the corporate trustee, this will be a time-consuming and costly exercise process. And, once reinstated will subsequently be followed by the need to claim back any monies that were paid to ASIC,” he cautioned.
The blog post was in response to the ATO’s reminder earlier in the week for directors of corporate SMSF trustees to make sure they pay the annual ASIC review fee on time.
The fee must be paid after ASIC sends the corporate trustee an annual statement after it conducts an annual review.
To this end, Bussoletti suggested directors of the SMSF corporate trustee need to take positive steps to ensure there will be no impediments to receiving the ASIC annual statement.
“A common reason for ASIC deregistering a company is due to the directors not receiving their annual statement. Reviewing the recorded address and email details will reduce the likelihood of this impacting your client. Any changes to company details can be submitted through ASIC’s online services,” he said.
Statistics indicate 65 per cent of SMSFs currently have a corporate trustee structure.
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