When you set up a new self-managed super fund one of the first decision you need to make is choosing a name for your SMSF. It’s best to keep the name of your SMSF as short and simple as possible. Similarly with the special purpose SMSF trustee company – keep it simple as well.
After close to 20 years of working with people setting up an SMSF, I have formed some opinions on what works best – and what doesn’t work so well – when setting up a self-managed superannuation fund including how to best choose a name of your freshly minted SMSF. The following practical tips are designed to make the SMSF set up process easier and prevent problems arising in the future.
Short SMSF names work best
When choosing a name for your SMSF, there are very few restrictions on what name you can choose. However, the shorter the SMSF name, the better.
For example, you could name your SMSF “The Fred Flintstone Ultimate Opportunity Superannuation Fund”. However, that name will need to fit on bank statements in respect of bank accounts and other asset registers that allow you to register the SMSF’s name. For example most share trading accounts the account designation (name of the SMSF) is limited to 23 characters.
Also, many bank computer systems will not allow such a long name. Instead, they will truncate the name. Accordingly, that can create uncertainty as to the true name of the SMSF – or, in an extreme situation, it can create uncertainty as to whether there are multiple SMSFs.
Therefore, my preference is to keep names as short as possible. Further, I would suggest the following:
• Do not use the word “the” in the name.
• Do not use the word “superannuation” – I believe the shorter, yet equally comprehensible, “super” is preferable, as is “SMSF”
• Omit other words (for example, “family” and “executive”).
Using the above example, my personal preference is to call the SMSF “Flintstone Super Fund”. It’s short enough to almost be guaranteed to fit on any bank statement, broker account or similar record. Another option for the name for your SMSF could be simply “Flintstone SMSF” or “Flintstone Fund”. There is no requirement to have the words “Fund”, “Superannuation Fund”, “Super Fund” or SMSF in the name, however it makes sense when people need to identify the account.
Avoid numbers in names
It’s possible for an individual to have more than one SMSF. For asset protection and other reasons it can make sense for some clients to have multiple SMSFs. For such clients, there is a temptation to put numbers in names, such as calling the second SMSF “Smith Super Fund No 2”, the third SMSF “Smith Super Fund No 3”, and so on.
However, assume that certain clients (John and Mary Smith) have done just this and then a tenant of commercial property held by the second or third super fund sues the landlord (that is, the SMSF trustee). If the name of the SMSF is ever disclosed to the tenant or their lawyers, it starts to suggest that there are other SMSFs with other assets (in other words, that the plaintiff might have found a wealthy defendant).
Further, the numbering system also causes difficulties if an SMSF is wound up. Consider an SMSF called “Smith Super Fund No 2” that pays out all of its assets and then has no further purpose and so is wound up. If it leaves behind “Smith Super Fund No 3”, anyone looking at that might ask the logical question: Where is “Smith Super Fund No 2”?
Accordingly, instead of putting numbers in SMSF names, I suggest something along the following lines. Call the first SMSF “Smith Super Fund”, call the second SMSF “J&M Super Fund”, call the third SMSF “Smith Retirement Fund”, and so on.
ATO recommends a unique SMSF name
The following is from the ATOs website (Register your fund)
The name of the SMSF that you put on the registration form must be the name that you used when you created the fund’s trust deed.
We will check that you are able to use that name; if the name that you choose has already been used for an SMSF it may delay processing your registration and ABN application. You can check whether your SMSF’s name has been used previously at Super Fund Lookup.
Sole-purpose SMSF corporate trustees
A corporate trustee is the best trustee structure and should be used when a new SMSF is established. Although there might be a slightly higher cost to set up an SMSF with a company trustee, the cost of changing from individual SMSF trustees to a company trustee is always MORE expenses and more time consuming and considering the SMSF is likely to be in existence for many decades, the cost over the lifetime of the SMSF is very minor.
There are a number of advantages of using a special purpose company trustee for an SMSF. The table below compares the advantages and disadvantages including:
|Liability protection for the SMSF members as individuals (Read more here).||Initial upfront and minor ongoing costs|
|Slightly more complex SMSF set up process||Additional administration to keep ASIC updated (minor)|
|Suitable for SMSFs with more complex investments including property||Some investment account application and set up processes may be slightly more tedious|
|Suits SMSFs where members are a not just a couple (multi-generation or other relationships)||Some providers charge additional ongoing fees to act as a registered agent (ASIC) or to be the registered office|
|ATO fines only issued once to the company trustee||Minor additional cost and additional paperwork to de-register the company when the SMSF is closed|
|Often required by lenders for SMSF loans||ASIC late fines many apply when annual registration fees are missed or paid late|
|When members change accounts and investments stay in the same name|
|Enables single member SMSFs|
|Electronic signing of SMSF trust deed possible (legislation in draft – October 2020 – learn more)|
How to choose a name for your SMSF trustee company
When naming the company that will act as trustee of the SMSF, similar considerations apply as when naming the SMSF: shorter is better; and avoid numbers.
Accordingly, when naming companies, use “Pty Ltd” instead of “Pty. Ltd.” or “Proprietary Limited”.
Unlike SMSFs, each company must have a unique name, and certain words are effectively banned from company names. The two most common of these banned words are “trust” and “trustee”. However, the word “super” is allowable. Accordingly, I prefer a name like “Flintstone Super Pty Ltd”. That being said, because company names must be unique, that exact name typically will not be available – so something like “F & W Flintsone Pty Ltd” could be used instead.
To check the availability of an SMSF company name, search the ASIC website here: Check Company Name Availability
Summary on choosing a name for your SMSF
The above information is purely informal recommendations to make the set up and administration of your SMSF easier. The key is to keep the SMSF and trustee company names short and simple.
When you’re ready to set up an SMSF, you can do so here: SMSF setup