SMSFs Increase Maximum Number of Allowable Members from 4 to 6
Following the safe passage of the Treasury Laws Amendment (Self-Managed Superannuation Funds) Bill 2020, SMSFs and small APRA funds can have up to six members from 1 July 2021.
Increased member capacity provides greater flexibility for families with more than four members to benefit from the change. The main advantages of the increase to six members are:
- Allows larger families to include all members (up to 6) in the same fund;
- Greater flexibility for succession planning – drawdown from older generations accounts / recontribution to younger family members/ acquire business real properties.
- Increasing both the investment opportunities and allowing greater flexibility to diversify;
- There is most likely a reduction in operating costs compared to a family that would require two or more funds to achieve the same outcome.
- Improving estate administration and exit planning.
However, the impacts of including additional members in a family super fund should be carefully considered before implementing, particularly in terms of fund control and suitability of investments, complications may include difficulty in the administration of an SMSF due to the number of members involved, reduced efficiencies in decision-making.
It is going to be critical that as part of any decision to increase the number of SMSF members, that the fund’s trust deed is reviewed and updated to ensure that the deed allows for this increased level of membership, along with the any changes that may be required to a constitution where a corporate trustee exists.
If you would like to know more regarding this change, please contact our office on 08 8333 7300 for further discussion.