Self Managed Super Funds – Get it right the first time!

The Superannuation Industry (Supervision) Act 1993 requires that all members of a self managed fund also be either trustees of the fund or directors of the trustee company.

An issue arises if new members are added to the fund. The new members must be trustees, or directors of the trustee company. The State Revenue Legislation Amendment Act 2010 (No 46) which came into force on 1 July 2010, changes the definition of ‘Special Trustees’ so that it no longer includes the trustees of self managed super funds.

What this means is that if you wish to change the trustees of a self managed super fund, you may now be liable for full ad valorem duty on the assets of the fund, rather than the $50.00 nominal fee which was previously payable.

The same catch is not a problem with changing the directors or adding directors to a trustee company.

Watkins Tapsell recommends that all self managed super funds be established with a trustee company, rather than individual trustees, due to the benefits provided for asset protection and separation of assets.

It is important to discuss the aim of the transaction at the outset of any transaction. It is more economical to set up the fund correctly at the beginning, avoiding a situation where substantial duty may be incurred if members need to be included at a later date.