Superannuation Trust and Companies:
Both the superannuation trust and the corporate trustee company
Superannuation Trust and Companies
1. Setting Up a Superannuation Trust
To establish a superannuation trust, you need to follow these steps:
Step 1: Understand the Type of Superannuation Fund
Determine the type of superannuation fund you want to set up. The options include:
Self-Managed Superannuation Fund (SMSF): A fund with fewer than five members where each member is a trustee or director of the corporate trustee.
Corporate Fund: A fund established by a company for its employees, typically a larger fund.
Industry, Retail, or Public Sector Fund: Funds established for specific purposes, usually requiring more complex structures and APRA registration.
Most of the steps below are applicable to SMSFs or smaller corporate funds. For larger funds, additional steps are required, including regulatory approvals from the Australian Prudential Regulation Authority (APRA). Step 2: Appoint the Trustees Individual Trustees for SMSFs : If setting up an SMSF, all members must be trustees. If the fund has individual trustees, there must be at least two trustees.
Corporate Trustee: If choosing a corporate trustee, a company needs to be established solely for acting as the trustee of the fund. All members must be directors of the corporate trustee.
A corporate trustee is often preferred for SMSFs due to the following benefits:
Continuity of Control: Easier succession planning if a member dies or leaves.
Limited Liability: Reduced personal liability for fund members.
Administrative Simplicity: Easier to handle changes in membership. Step 3: Draft the Trust Deed A trust deed is the legal document that establishes the fund and outlines its governing rules. It should include:
Fund Name: The name of the superannuation fund.
Trustee Details: Names and details of the appointed trustee(s).
Objectives of the Fund: Clear statement of the fund’s purpose, which must comply with the sole purpose test (i.e., providing retirement benefits).
Powers and Duties of Trustees: Outlining how the trustees will manage the fund's investments, distribute benefits, and comply with regulations.
Membership Rules: Requirements for membership, contributions, and benefits.
Amendment Provisions: Processes for making changes to the trust deed.
It is essential to engage a qualified solicitor or a professional superannuation service provider to draft the trust deed to ensure it complies with the Superannuation Industry (Supervision) Act 1993 (SIS Act) and other relevant regulations. Step 4: Execute the Trust Deed All parties (trustees and members) must sign the trust deed. The execution must be witnessed, and the deed should be stamped (if required) according to state or territory laws. Step 5: Register with the Australian Taxation Office (ATO) You need to register the superannuation trust with the ATO to:
Obtain a Tax File Number (TFN): This is necessary for the fund's tax reporting and administration.
Obtain an Australian Business Number (ABN): Required for the fund to be recognized by the ATO and for receiving contributions.
Registration can be done online through the ATO’s Business Portal or by using a tax agent or accountant. Step 6: Open a Bank Account for the Fund Separate Bank Account: Open a separate bank account in the name of the superannuation fund to manage its finances. All contributions, rollovers, and payments must be made through this account. Step 7: Develop an Investment Strategy The trustees must formulate a written investment strategy that considers:
Fund Objectives: The fund's objectives and the needs of its members.
Risk and Return: The risk and return profile suitable for the members.
Asset Classes: Diversification across different asset classes to manage risk.
Liquidity Needs: Ensuring there is enough liquidity to pay member benefits when required.
Insurance for Members: Consideration of insurance for fund members, such as life or disability insurance. Step 8: Register with SuperStream For SMSFs receiving employer contributions, ensure compliance with the SuperStream data and payment standards. This involves using a SuperStream-compliant payment system or service. Step 9: Obtain an Actuarial Certificate (if required) If the fund is paying a defined benefit pension or needs to segregate assets for tax purposes, an actuarial certificate may be required. Step 10: Comply with Ongoing Obligations Annual Returns: Lodge annual returns with the ATO.
Independent Audit: Arrange for an independent audit of the fund's financial statements and compliance.
Reporting to Members: Provide members with annual statements and updates on their superannuation benefits. 2. Setting Up a Company in Australia for a Corporate Trustee If you choose a corporate trustee structure, you need to set up a company. Here’s how: Step 1: Choose a Company Structure Decide on the type of company that will act as the corporate trustee. Most commonly, this will be a proprietary limited company (Pty Ltd) set up solely to act as the SMSF trustee. Step 2: Choose a Company Name Select a name for the company that complies with the Australian Securities and Investments Commission (ASIC) naming rules. The name should be unique and not identical to an existing registered company or business name. Step 3: Appoint Directors and Secretary Directors: All members of the SMSF must be directors of the corporate trustee company. At least one director is required for a proprietary company.
Secretary: Optional, but if appointed, the secretary must reside in Australia. Step 4 : Register the Company with ASIC Apply Online: Register the company with ASIC through its website or through a registered agent or solicitor. You will need to provide:
Company name.
Registered office address.
Principal place of business address.
Details of directors, secretary (if any), and shareholders.
Pay the Registration Fee: There is a fee for registering a company, which must be paid to ASIC.
Upon successful registration, ASIC will issue a Certificate of Registration and an Australian Company Number (ACN). Step 5: Obtain an ABN and TFN for the Company ABN and TFN: Register the company for an ABN and a TFN through the Australian Business Register (ABR) website. Step 6: Comply with Corporate Obligations Maintain Corporate Records: Keep records of company activities, minutes of meetings, and changes to directors or members.
Annual Reviews: Pay the annual review fee to ASIC and confirm company details.
Company Constitution: Adopt a company constitution or use the replaceable rules under the Corporations Act 2001. 3. Compliance and Ongoing Management Both the superannuation trust and the corporate trustee company must comply with several ongoing obligations:
Compliance with Superannuation Laws: The fund must comply with SIS Act, ATO regulations, and all superannuation laws.
Annual Audits: The superannuation fund must undergo an independent audit annually.
Tax Compliance: File tax returns, pay taxes, and comply with superannuation fund tax obligations.
Corporate Governance: For a corporate trustee, maintain ASIC records, pay fees, and ensure directors act in accordance with their fiduciary duties. 4. Key Considerations Seek Professional Advice: It is advisable to consult with a solicitor, accountant, or superannuation specialist when setting up a superannuation trust or company to ensure compliance with all legal requirements. Understand Fiduciary Duties: Trustees must act in the best interests of the fund members and adhere to the highest standards of diligence and care.
Corporate Fund: A fund established by a company for its employees, typically a larger fund.
Industry, Retail, or Public Sector Fund: Funds established for specific purposes, usually requiring more complex structures and APRA registration.
Most of the steps below are applicable to SMSFs or smaller corporate funds. For larger funds, additional steps are required, including regulatory approvals from the Australian Prudential Regulation Authority (APRA). Step 2: Appoint the Trustees Individual Trustees for SMSFs : If setting up an SMSF, all members must be trustees. If the fund has individual trustees, there must be at least two trustees.
Corporate Trustee: If choosing a corporate trustee, a company needs to be established solely for acting as the trustee of the fund. All members must be directors of the corporate trustee.
A corporate trustee is often preferred for SMSFs due to the following benefits:
Continuity of Control: Easier succession planning if a member dies or leaves.
Limited Liability: Reduced personal liability for fund members.
Administrative Simplicity: Easier to handle changes in membership. Step 3: Draft the Trust Deed A trust deed is the legal document that establishes the fund and outlines its governing rules. It should include:
Fund Name: The name of the superannuation fund.
Trustee Details: Names and details of the appointed trustee(s).
Objectives of the Fund: Clear statement of the fund’s purpose, which must comply with the sole purpose test (i.e., providing retirement benefits).
Powers and Duties of Trustees: Outlining how the trustees will manage the fund's investments, distribute benefits, and comply with regulations.
Membership Rules: Requirements for membership, contributions, and benefits.
Amendment Provisions: Processes for making changes to the trust deed.
It is essential to engage a qualified solicitor or a professional superannuation service provider to draft the trust deed to ensure it complies with the Superannuation Industry (Supervision) Act 1993 (SIS Act) and other relevant regulations. Step 4: Execute the Trust Deed All parties (trustees and members) must sign the trust deed. The execution must be witnessed, and the deed should be stamped (if required) according to state or territory laws. Step 5: Register with the Australian Taxation Office (ATO) You need to register the superannuation trust with the ATO to:
Obtain a Tax File Number (TFN): This is necessary for the fund's tax reporting and administration.
Obtain an Australian Business Number (ABN): Required for the fund to be recognized by the ATO and for receiving contributions.
Registration can be done online through the ATO’s Business Portal or by using a tax agent or accountant. Step 6: Open a Bank Account for the Fund Separate Bank Account: Open a separate bank account in the name of the superannuation fund to manage its finances. All contributions, rollovers, and payments must be made through this account. Step 7: Develop an Investment Strategy The trustees must formulate a written investment strategy that considers:
Fund Objectives: The fund's objectives and the needs of its members.
Risk and Return: The risk and return profile suitable for the members.
Asset Classes: Diversification across different asset classes to manage risk.
Liquidity Needs: Ensuring there is enough liquidity to pay member benefits when required.
Insurance for Members: Consideration of insurance for fund members, such as life or disability insurance. Step 8: Register with SuperStream For SMSFs receiving employer contributions, ensure compliance with the SuperStream data and payment standards. This involves using a SuperStream-compliant payment system or service. Step 9: Obtain an Actuarial Certificate (if required) If the fund is paying a defined benefit pension or needs to segregate assets for tax purposes, an actuarial certificate may be required. Step 10: Comply with Ongoing Obligations Annual Returns: Lodge annual returns with the ATO.
Independent Audit: Arrange for an independent audit of the fund's financial statements and compliance.
Reporting to Members: Provide members with annual statements and updates on their superannuation benefits. 2. Setting Up a Company in Australia for a Corporate Trustee If you choose a corporate trustee structure, you need to set up a company. Here’s how: Step 1: Choose a Company Structure Decide on the type of company that will act as the corporate trustee. Most commonly, this will be a proprietary limited company (Pty Ltd) set up solely to act as the SMSF trustee. Step 2: Choose a Company Name Select a name for the company that complies with the Australian Securities and Investments Commission (ASIC) naming rules. The name should be unique and not identical to an existing registered company or business name. Step 3: Appoint Directors and Secretary Directors: All members of the SMSF must be directors of the corporate trustee company. At least one director is required for a proprietary company.
Secretary: Optional, but if appointed, the secretary must reside in Australia. Step 4 : Register the Company with ASIC Apply Online: Register the company with ASIC through its website or through a registered agent or solicitor. You will need to provide:
Company name.
Registered office address.
Principal place of business address.
Details of directors, secretary (if any), and shareholders.
Pay the Registration Fee: There is a fee for registering a company, which must be paid to ASIC.
Upon successful registration, ASIC will issue a Certificate of Registration and an Australian Company Number (ACN). Step 5: Obtain an ABN and TFN for the Company ABN and TFN: Register the company for an ABN and a TFN through the Australian Business Register (ABR) website. Step 6: Comply with Corporate Obligations Maintain Corporate Records: Keep records of company activities, minutes of meetings, and changes to directors or members.
Annual Reviews: Pay the annual review fee to ASIC and confirm company details.
Company Constitution: Adopt a company constitution or use the replaceable rules under the Corporations Act 2001. 3. Compliance and Ongoing Management Both the superannuation trust and the corporate trustee company must comply with several ongoing obligations:
Compliance with Superannuation Laws: The fund must comply with SIS Act, ATO regulations, and all superannuation laws.
Annual Audits: The superannuation fund must undergo an independent audit annually.
Tax Compliance: File tax returns, pay taxes, and comply with superannuation fund tax obligations.
Corporate Governance: For a corporate trustee, maintain ASIC records, pay fees, and ensure directors act in accordance with their fiduciary duties. 4. Key Considerations Seek Professional Advice: It is advisable to consult with a solicitor, accountant, or superannuation specialist when setting up a superannuation trust or company to ensure compliance with all legal requirements. Understand Fiduciary Duties: Trustees must act in the best interests of the fund members and adhere to the highest standards of diligence and care.
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