Mr Hor pointed to the administrative penalties of up to $10,200, which can be applied to each individual trustee of a fund, as opposed to a single penalty for a corporate trustee.

“Even the definition of a regulated fund in section 19 of the SIS Act favours having a corporate trustee in that a fund which has individual persons acting as trustees will only satisfy the definition if the rules of the fund require that the sole or primary purpose of the fund must be to pay old age pensions,” Mr Hor said.

“Whereas having a corporate trustee prima facie provides greater flexibility by allowing members to take a lump sum without having to start a pension first and then commute the pension to a lump sum. Whilst there was a constitutional reason for the difference, it still favours having a corporate trustee.”

From the ATO’s perspective as regulator, having corporate trustees means there is another body of well-developed rules, namely the Corporations Law and the common law, to help ensure prudent management of investment funds, Mr Hor said.

Mr Hor also noted the ASIC fees for establishing and maintaining a corporate trustee would be welcomed by the government.

“Has the ATO used incentives to affect taxpayer behaviour in the past? I would suggest that the continued acceptance of so-called ‘negative gearing’ is a good example. It has remained permissible since 1985 to encourage the provision of affordable residential rental accommodation, and for this reason is likely to continue notwithstanding all the hype about the current property market boom,” he said.

Also speaking to SMSF Adviser, a partner in law firm Holley Nethercote, David Court, said while it may be legally possible for the ATO to actively push the corporate trustee option, it may not be politically viable.

“Even if the ATO was gung-ho in favour of it and ASIC was as well, I think it’s ultimately a political decision and… there’s a pretty powerful political lobby of SMSF investors,” Mr Court said.

He added that it is clear the ATO prefers the corporate trustee option, and that there is “no compelling reason” why being an individual trustee is better than being corporate.

“There’s no legal advantage in being individual; it's just it actually makes things harder.”