SMSFs Increase to Maximum Number of Allowable Members from 4 to 6
The measure to increase the number of members allowed in an SMSF from four to six was introduced into Parliament 2 September 2020 and remains before senate without opposition. Therefore, it is not a question of whether this bill will be passed but when this bill will come into effect and how this may be a consideration for your SMSF.
Key takeaways:
Permits greater flexibility for joint management of retirement savings:
May aid in preventing elder Financial abuse where instead of one child assuming control of the SMSF, more of the family could be involved.
Allows for succession planning i.e. drawdown from partners/older generations accounts and recontribution from younger family members to retain business real property for example.
Allows larger families to include all members (up to 6) in the same fund
High net worth individuals will also be able to plan for their children's future by making contributions into a child's super account. The changes will ultimately result in increased funds being deposited and retained in super and therefore taxed concessionally.
The number of parties required to sign the SMSF Accounts and Statements:
Corporate Trustees – with only 1 or 2 directors both must sign; 3 or more half sign.
Individual Trustees - - with only 2 trustees both must sign; 3 or more half sign.
Minors cannot act as trustees or directors, so the SMSF's records must reflect that the child's parent or guardian is appointed and acts as trustee/director of the trustee 'in place of the member'.
If a fund’s trust deed is prescriptive on the number of allowable members, a trust deed upgrade may be necessary to cater for an elected increase.
Note at this stage Queensland state legislation does not allow 6 individual trustees, the limit remains at 4.
If you would like more information, please give one of our friendly Gold Coast advisors a call on (07) 5504 5700.
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