SMSFs Increase to Maximum Number of Allowable Members from 4 to 6

|by Sophie Shepherd|Self Managed Super Funds

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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