There are a number of reasons why you should make the decision about changing SMSF trustee from individuals to a company, but what exactly needs to happen?
There are two main areas that need to be addressed as part of the change:
1. The legal change
2. Investment name changes
The legal change
Changing SMSF trustee from individuals to a company must be completed with the oversight of a legal practitioner. It involves the detailed review of the clauses or rules of the SMSF trust deed to determine exactly how a new company trustee must be appointed.
A new special purpose company needs to be registered with the Australian Securities & Investments Commission and all members of the SMSF have to be directors of the company. Special purpose companies that will only act as trustee of a SMSF pay reduced annual registration fees. It is not recommended that an existing company be used as trustee.
A legal document will be prepared to firstly appoint the newly formed company as a new trustee of the SMSF and secondly remove the existing individual trustees. This document will need to be correctly executed by all members of the SMSF for the change of trustee to be valid.
It is also recommended that the existing SMSF trust deed is amended / upgraded after the appointment of the new company trustee. This ensures the SMSF is up to date with any changes to superannuation laws and new strategies that may be available.
From a practical sense it also means that there is one document containing the details of the SMSF and the new company trustee, rather than the trust deed with the old trustees and a separate document outlining the change to the new company trustee.
Investment name changes
Superannuation laws require any accounts and investments owned by the SMSF to be recorded in the name of the trustee(s) of the fund. When changing SMSF trustee from individuals to a company, the name recorded on the investment accounts also needs to be changed.
For example:
John Smith & Jane Smith as trustees for (ATF) Smith Family Super Fund
would need to change to
Smith Super Pty Ltd ATF Smith Family Super Fund
What needs to happen in a practical sense will be determined by the actual investments and accounts held by the SMSF. The following is a brief guide of what to expect.
Bank Accounts
In almost all cases your bank will need to be provided with either originals or certified copies of the change of trustee documentation.
Some banks will require a new account to be established and will get you to complete an entirely new application form and will issue a new account number. Depending on the bank they may assist you with this process and link the account number of the new account to the old account number so any deposits / direct debits will be moved to the new account.
Some banks and credit unions have more flexibility and will enable the name to be changed on an existing account. Macquarie and Bank of Queensland for example will do this when provided with a copy of the change of trustee documentation.
Tip: Phone your bank or check their website to determine what needs to happen to get your SMSF account into the correct name.
Tip: Take the opportunity to review the bank accounts you are using within your SMSF and see whether you can reduce the number of accounts to make the management and administration easier.
Term Deposits
Most banks will not enable you to change the name on a term deposit without breaking the deposit and placing a new deposit. It is suggested that any term deposits in the name of the individual trustees be left to mature and any re-investments be made in the name of the corporate trustee.
Where the maturity date of any existing term deposits is after the end of the financial year, an additional declaration may be requested from the auditors of the SMSF to ensure that there is no debate on the beneficial owner of the deposit, especially when the name of the actual SMSF is not recorded.
Some Banks will also require one account to remain in the name of the individual trustees for the payment of the interest and principal on maturity.
Listed Shares / Broker Accounts
Where there is a broker (CHESS Sponsor) attached to your shareholdings, you have a few options in regards to how you go about transferring the shareholdings into the correct name when changing SMSF trustee from individuals to a company.
Most traditional ‘full service’ stockbrokers will action the transfers on your behalf. They may charge additional fees for this service.
If you are using an online broker such as Commsec it is possible to transfer all shareholdings from the existing account (in the name of the individual trustees) to a new account (in the name of the corporate trustee) however there will be a fee attached to each share transfer ($54 for Commsec). This option becomes expensive if you have a significant number of shareholdings to be transferred. However it’s recommended you contact your broker to discuss these transfers as often they will change a single fee for each ‘batch’ of transfers. For example if your portfolio includes 13 companies that use both Link Market Services and Computershare as the registries, you may only incur 2 x transfer fees, rather than a transfer fee per company.
It is possible to simply close your broker account. This will trigger the removal of the CHESS Sponsor (broker) and the share registries will issue new holding statements with an SRN (Security Holder Reference Number)Â i.e. the shares will become ‘issuer sponsored’.
Once the shares are issuer sponsored, they can be transferred via an off-market transfer form to the name of the new trustee company. The share registries will charge a small fee – $50 for Computershare and $55 for Link Market Services to process all transfers (regardless of the number of holdings).
Once this transfer is complete your shares will be in the correct name and can be transferred to a broker using an ‘Issuer to Chess’ conversion form. Many brokers enable this conversion for free.
Tip: Take the opportunity to review your SMSF portfolio and dispose of any non-performing shares prior to undertaking transfers to minimise transfer fees.
Managed Funds
Managed funds held under a wrap account are easy to transfer into the correct name as the wrap account acts as the custodian, so a request to the wrap account provider via your adviser enables the name change.
Where managed funds are owned directly (not via a wrap account), each managed fund provider will need to be contacted and they will provide specific instructions on how to transfer the units. In most cases a transfer form accompanied by a certified copy of the change of trustee documents will be required.
Unfortunately some managed funds will require stamp duty to be assessed and paid on the transfers when changing SMSF trustee from individuals to a company.
Tip: Review the managed fund investments with your financial adviser to determine whether they are still suitable for your portfolio or whether the opportunity should be taken to sell the units and invest the proceeds elsewhere.
Property
The process for transferring property from the names of the individual trustees to the new corporate trustee will vary depending on the State the property is located in; however the following steps are typical:
1. The change of trustee document should be stamped by the relevant state revenue office.
2. Transfer for with the title office completed and also stamped with any required declarations completed (in most cases there should be $0 stamp duty on the transfer).
3. Stamped transfer forms provided to the titles offic and the applicable transfer fees paid.
Tip: Engage a solicitor to undertake the forms and work required for the transfer to save you time and potential aggravation as revenue and titles offices can be extremely specific with their requirements.
Don’t forget to inform the ATO about changing SMSF trustee from individuals to a company
It’s essential that when you are changing SMSF trustee from individuals to a company, your accountant or SMSF administrator updates the ATO regarding the change.
This can be completed online.
More information on the ATOs website here: https://www.ato.gov.au/super/self-managed-super-funds/administering-and-reporting/notify-us-of-changes/
Grow SMSF are experts at assisting you in making the change from individual trustees to a special purpose corporate trustee.  If you would like to speak to us about how to make the change, please contact us to discuss.
10 comments
Terence Khoh
May 3, 2021 at 5:58 am
Do I need a new TFN for this changed of individual trust to Corporate trustee, or do I use the individual trust TFN for this new Corporate Trustee? If I need to have a new TFN for the Corporate Trustee, do I need to inform or change every single share holdings TFNs?
Kris Kitto
May 3, 2021 at 8:25 am
No. Company trustee will NOT have it’s own TFN or ABN.
No. You don’t need to inform the share registry of a new TFN.
You will need to either liaise with your broker (HIN) or the registries (SRN) to transfer holdings to the name of the new trustee as per the article.
lew
February 2, 2022 at 10:39 am
Can you please confirm if there is change from Individual trustees to Company trustee change for a Super or Trust. WIll that trigger a CGT event if the directors are the same ? In what instance will it trigger a CGT event if we need to trasnfer assets from Individual trustees to Company trustee.
Please confirm
Kris Kitto
February 2, 2022 at 12:32 pm
NO CGT because there is NO CHANGE IN BENEFICIAL OWNERSHIP!
The SMSF never stops holding the assets for the members. Same with a Trust (in most cases unless there are other substantial changes that create a whole new trust).
Monica Marshall
February 28, 2022 at 12:29 pm
At what point does the existing individual trustee Superfund’s name disappear ? What I mean is can I use the name that I currently have for my SMSF Individual trustees set up for my new Corporate Trustees setup ? It is very hard to find a unique name for the corporate trustee fund, the website keeps showing similar names.
Kris Kitto
February 28, 2022 at 12:57 pm
The name of your existing SMSF stays the same. Remember that changing the trustee doesn’t change the trust (SMSF).
SMSF names – as registered with the ATO and visible on Super Fund Lookup – do not need to be unique.
When you set up a company that will be the new trustee of the SMSF, that company name as registered with ASIC does need to be unique. You can do an identical name search via the ASIC website. It doesn’t matter if existing company names are similar – they just can’t be identical to the name you want.
Unless you’re a lawyer, it’s not recommended attempting a DIY change from individual trustees to a company trustee. The documents must be correct and the ATO needs to be updated within 28 days of the trustee changing.
When you change trustees its a good time to review your existing SMSF accounts and investments, and determine whether there are more suitable providers around.
Michael Sexton
February 9, 2023 at 8:57 am
Good article.
Why can’t a change of name form be used?
Kris Kitto
February 9, 2023 at 9:05 am
Changing the trustee of an SMSF is VERY DIFFERENT to changing the name of an SMSF itself.
The trustee(s) of an SMSF legally hold the assets on behalf of the (beneficiaries of the) SMSF. When you change trustees, you are changing the legal owner. There is no change in beneficial ownership – i.e. the assets still belong to the SMSF after the trustee is changed.
Changing the trustee is a formal process set out on the trust deed. Normally a deed of appointment and removal of a trustee is completed to effect the legal change.
Then the assets and accounts held by the SMSF need to change to reflect the new trustee. Yes, this will appear on the statements as a ‘change of name’ (showing the new trustee).
jenny
February 1, 2024 at 2:09 pm
Can I established a new Company Trustee then close the current Individual Trustees? Maybe that easy to Changing SMSF trustee from individuals to a company trustee.
Also we still need to add more members to SMSF company trustee.
Kris Kitto
February 1, 2024 at 2:15 pm
You *can* close an existing SMSF and then establish a new SMSF with company trustee, however, this will be a lot more costly than simply changing the trustee of the existing SMSF.
Firstly, you will trigger CGT as the original SMSF will be selling/transferring assets to the new SMSF.
Secondly, there is more involved in terms of accounting, minutes and other tasks to windup/close the original SMSF.
Changing the trustee via a deed of appointment and removal is the best approach.
Yes, there will be time and financial costs to update the investments and move the accounts etc, however changing a trustee is a good opportunity to ‘refresh’ the SMSF and look at all the accounts/platforms/investments and ensure you’re using the most suitable products for your needs.