Jul 1, 2021 Matthew Hung
SMSF Funds now with 6 members
Effective from 1st July 2021, Self-Managed Superannuation Funds (SMSF) will be able to have up to 6 members, an increase on the previous limit of 4 members.
This change will allow SMSF members to combine super balances, enhancing the size of family SMSF’s, and potentially making super investments more cost efficient.
If you are planning to take advantage of the increased member limit, keep a few things in mind.
Your SMSF Trust Deed should be reviewed and updated prior to you admitting additional members to ensure that it is consistent with the new provisions. Some Deeds may cap member numbers to 4.
You also need to ensure that every member is either a trustee of the fund, or a director of the trustee company, so some paperwork will be required at the time a new member is admitted to the SMSF.
If your SMSF has individual Trustees and you are considering admitting more members, this will be a good time to consider changing your Trustee from individuals to a company.
The names of all trustees must be shown on investment documentation such as property titles and share records. In light of this, do you really want to have to show all six members’ names, only to have to change it when a member leaves the fund or a new one is added? Having a corporate trustee means you only need to show the company name, which remains unchanged where there is a change to the fund membership.
Another reason for having a corporate trustee is that certain breaches of the Superannuation rules can result in a penalty which is imposed on each trustee. If you have a corporate trustee, the fund will be hit with one penalty. If you have six trustees (because you have six members) you will be hit with the same penalty six times – ouch!
With all its ins and outs, Super can seem confusing, but at RDL we make it easy for you. Just give us a call on 9878.1477.