By Millinda Cobban, Associate Director, SMSFcentral
Last reviewed 12 August 2026. Figures current for the 2026-27 financial year.
Choosing between a corporate trustee vs individual trustee is one of the first decisions a new SMSF makes, and one of the few that is expensive to reverse. Both structures are entirely valid under the Superannuation Industry (Supervision) Act 1993, and both attract identical investment rules, contribution caps, pension rules and reporting obligations. The differences show up in who holds the assets, what a mistake costs, and how easily the fund keeps functioning when a member dies or leaves. Which structure suits a particular fund is a decision for its members, so what follows sets out the differences rather than a recommendation.
The two structures
With individual trustees, every member of the fund is also a trustee. Two members means two trustees, four members means four. With a corporate trustee, a proprietary limited company acts as sole trustee of the fund and every member is a director of it. Minors are the only real exception in either case, where a parent or guardian can act for a member under 18.
Who holds the assets
Under individual trustees, every asset of the fund has to be held in the names of all the trustees jointly. A three-member fund therefore has three names on the property title, three names on the share registry, three names on the bank account. When somebody joins or leaves, every one of those registrations has to change.
A corporate trustee holds everything in the company’s name, and the company’s name never changes. A change of membership means updating director records with ASIC, not re-titling assets. For a fund holding nothing but cash and listed shares that difference is a nuisance. For a fund holding real property it can be the whole ballgame, because a title transfer brings conveyancing costs and potentially duty.
Single member funds
Section 17A sets the rules here, and they are not symmetrical. A single member fund with a corporate trustee can have the member as sole director, or as one of two directors. A single member fund with individual trustees must have two trustees: the member, plus either a relative or another person who does not employ the member. There is no such thing as a single member fund with one individual trustee. Needing to find and appoint a second person, who then carries trustee obligations for a fund they have no interest in, is why so many single member funds use a company.
Perpetual succession
A company continues to exist whatever happens to its directors. If a member dies, loses capacity or wants out, the company remains the trustee and the remaining directors keep managing the fund without a break.
With individual trustees, the person who died was also a trustee, so the fund’s legal capacity has a hole in it until somebody fills the role. During that gap the fund may be unable to buy, sell or even move money. The trust deed and state succession law determine who can act in the interim, and that is exactly the moment when a family least wants a legal question mark. Where death benefits and reversionary nominations are in play, our pension management service deals with the mechanics.
The penalty difference
This is the comparison most often quoted, and it deserves the attention. The ATO imposes administrative penalties under Part 21 of the SIS Act in penalty units, and the Commonwealth penalty unit rose from $330 to $364 on 1 July 2026.
The heaviest penalties under s166 run to 60 penalty units, which is $21,840 in 2026-27. That band covers lending fund money to a member or relative under s65(1), borrowing under s67(1), and breaching the in-house asset rules under s84(1). Lesser contraventions carry 20, 10 or 5 units, so the smallest administrative penalty is $1,820.
Where the structures part company is in how many times the ATO applies that figure. With individual trustees, each trustee cops the penalty separately, so a single 60-unit contravention in a two-member fund produces $43,680. With a corporate trustee, the directors are jointly and severally liable for one penalty, so the same contravention produces $21,840 however many directors there are. In both cases the trustees or directors pay personally, and they cannot take the money from the fund or have the fund reimburse them.
What each structure costs
A corporate trustee costs $636 to register with ASIC, up from $611 on 1 July 2026, and $70 a year in review fees. That $70 rate applies only to a special purpose company, which requires the constitution to restrict the company to acting as trustee of a superannuation fund. Without that restriction the company pays the standard proprietary company review fee of $342. The trustee company itself does not usually trade or earn income, so it generally has no company tax return to lodge, though it would need one if it did have assessable income.
Individual trustees cost nothing to establish and nothing annually. The cost arrives later and all at once, when a change in membership forces a re-titling of every asset. One property transfer, with legal fees, registration costs and possibly duty, can outweigh a couple of decades of ASIC fees.
Where each structure tends to be used
Corporate trustees turn up most often in funds with the following features, though whether the structure suits a given fund is a matter for its members and their adviser:
- Single member funds, where the alternative is recruiting a second individual trustee
- Funds that hold, or plan to hold, real property
- Funds where succession matters, particularly where a member’s health is a live consideration
- Multi-member funds looking to contain penalty exposure
- Funds whose membership is expected to change, such as adult children joining
Individual trustees remain common in two-member funds, typically a couple, where the assets are listed shares and cash and nobody expects the membership to change. The saving is real if modest: $636 up front and $70 a year.
Changing structure
Moving from individual trustees to a corporate trustee is a defined process rather than a form, and it is the work covered by our trustee change service:
- Register a new proprietary limited company with ASIC
- Appoint each fund member as a director
- Amend the trust deed to replace the individual trustees with the company
- Notify the ATO of the change in trustee details
- Re-title every fund asset from the individuals’ names into the company’s name
Step five is the one that takes the time and the money. Real property needs a conveyancer or solicitor; shares and managed funds need registry updates. Several states offer a concession or exemption where a transfer of this kind involves no change in beneficial ownership, but both the relief available and the evidence required to claim it differ from state to state, so check before assuming it. If you are setting up a new fund, none of this arises, which is the argument for settling the structure at the outset.
Common questions
Can I be the sole director and sole member?
Yes, with a corporate trustee. The company acts as trustee, you are its sole director and the fund’s sole member, and this is the usual arrangement for single member SMSFs.
Is GST charged on the ASIC annual review fee?
No. The $70 review fee for a special purpose company is a regulatory fee, not a taxable supply.
Can the trustee company also run a business?
It can, and there are two consequences. A trading company exposes the trustee to creditors of that trading activity, and it loses the special purpose review fee of $70, moving to $342. Restricting the constitution to acting as trustee of a superannuation fund avoids both, which is why the special purpose company is the standard arrangement.
What happens if a trustee loses capacity?
With individual trustees an enduring power of attorney may allow someone to act, depending on the trust deed and state law. With a corporate trustee the remaining directors carry on and appoint a replacement director for the affected member.
Does a corporate trustee cost more to administer each year?
Only by the $70 ASIC review fee. Administration, accounting and audit fees for the fund itself are generally the same either way.
Can I switch back to individual trustees?
Yes, though few people do. It is the same process in reverse: amend the deed, appoint the individuals, re-title every asset, notify the ATO, and deregister the company if it has no further use.
Getting the structure right
We set funds up with whichever structure the members choose, register the trustee company where one is needed, and handle a change of trustee on an existing fund. If you would like to talk through what either option would mean for your fund, call 02 8412 0086 or email [email protected].
This is general information only, not personal financial advice. SMSFcentral does not hold an Australian Financial Services Licence.