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I understand a single member SMSF can have that member as the sole director of the corporate trustee. My question is can the member also be the sole shareholder? Or does it need an additional shareholder?
Thanks.
SYD
Thanks Terry_w.
LPR = Legal Personal Representative.
BDBN = Binding Death Benefit Nomination
Please let me know if these are incorrect.
If the arrangement has the sole shareholder, sole director and sole member being the same person, is there any risk the arrangement can be considered a sham?
Thanks,
SYD
Yes that is correct.
Why would you think it could be considered a sham? The company is a 3rd party holding assets on trust for the member.
Yes that is correct.
Why would you think it could be considered a sham? The company is a 3rd party holding assets on trust for the member.
I am thinking a person cannot hold assets on trust for themselves.
So even though there is no other person involved, having a company as trustee does not make the arrangement a sham.
Could this arrangement also work for non-super trusts where you are the sole beneficiary?
I am thinking a person cannot hold assets on trust for themselves.
So even though there is no other person involved, having a company as trustee does not make the arrangement a sham.
Could this arrangement also work for non-super trusts where you are the sole beneficiary?
Thanks.
SYD
I am sure if you were a family lawyer you would be saying it is a sham? I dunno
Why? Super is divisible by the family court and whatever is in the deed etc can be disregarded. See Family Law Act s 90MB
I understand a single member SMSF can have that member as the sole director of the corporate trustee. My question is can the member also be the sole shareholder? Or does it need an additional shareholder?
Thanks.
SYD
Disregarding whatever is said in a deed is tantamount to saying the whole operation is a sham. That was my point.
I am thinking a person cannot hold assets on trust for themselves.
So even though there is no other person involved, having a company as trustee does not make the arrangement a sham.
Could this arrangement also work for non-super trusts where you are the sole beneficiary?
Thanks.
SYD
When the SIS Act was being drafted this issue of a individual acting as trustee and beneficiary was raised. It became a concern in legal circles and became a issue of debate so the SIS Act was drafted to avoid the issue so that a sole member and sole human trustee are not possible...More from the issue of contract law interestingly....In the SMSF owned a factory it cant very well lease it to the same member. ie John leases to John. You cant contract with yourself. It was felt such funds could be non-compliant and have non arms length income (Called special income then). The whole sole member, sole human trustee issue was averted by drafting SIS that way so that one member, one human trustee can never occur.
The original 1993 Explanatory Memorandum is VERY hard to find as it predates even computerised documents. It was typed and isnt archived on the web. I had a copy sourced from the Library in Parliament House and it made very interesting reading and explains a lot about the peculiar issues contained in SIS. I should seek another copy....