A corporate trustee may be required in the case of a single member fund.
Corporate trustees can also be used with multiple member funds as well. Corporate trustees have a few advantages over individual trustees. A corporate trustee can be simpler to use than an individual trustee; this can result in easier administration and fewer errors.
For example, a corporate trustee can help members clearly identify those assets that are owned by the fund and those assets that are owned by them; as assets held in the fund are held under the company name, not their individual name. Clearly identifying who holds which assets can help avoid such things as banking dividends in the wrong account.
Membership changes under a corporate trustee are often more simple then individual trustees. When changing membership under a corporate trustee it is a simple change in the directors of the company. Where individual trustees are used it may be necessary to change the ownership detail of all of the funds assets. For example, where a fund’s assets are held in the name of all individual trustees and one member leaves the fund, the ownership details of all the assets will need to be changed. This can be time consuming and costly.
There are also some disadvantages to using a corporate trustee. There are extra costs associated with incorporation and in meeting the ongoing compliance and reporting requirements under the Corporation Act. There are also higher penalties that can apply to corporate trustees where a breach of SIS has occurred.
Clearly identifying assets can also be a problem where trustees have used their trading company to act as the trustee of the super fund.