SMSFs operating under a corporate trustee should be the only superannuation vehicle tied to that structure as the risk of compliance failures increases if more funds operate under its banner, according to two SMSF specialists.
Heffron SMSF specialist Sean Johnston said it was possible for a corporate trustee to be the trustee for multiple funds under superannuation law, but it could create a raft of problems for the trustees and fund members.
“As long as the trustee meets the rules where all members are directors and all directors are members, there is no problem with a trustee company being the trustee for multiple SMSFs or multiple other entities, such as family trusts,” Johnston said in a recent online question and answer session during a webinar.
“That said, we would never recommend it and would always counsel against it because it’s much easier to maintain compliance with the Superannuation Industry (Supervision) Act if you don’t have these things doing multiple roles.
“There is a risk there of having assets in the incorrect name or calling on assets or liabilities of another entity.
“There is a risk the structure is not going to be appropriate for whatever else you’re doing with it and you might need to change your directors, and if the trustee is involved with a trading entity that goes bankrupt, then you’ve got some problems if that company becomes insolvent.
“Nothing really prohibits it, but it is certainly not advisable. If you can have a sole purpose trustee for your SMSFs, why do anything to add on that risk?”
Heffron senior SMSF specialist Annie Dawson said when corporate trustees cover multiple funds, people often make mistakes.
“They forget the trustee now has multiple hats and they’ll make changes to suit one structure, but forget about the other structure,” Dawson said.
“The ATO is also asking more questions of people involved in multiple funds and it might be fine, but you are likely to get more scrutiny.”
