From 1 July 2021, self-managed super funds (SMSF) and small APRA funds (SAFs) will be able to have up to six members – increasing from the current maximum of four members. Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 received royal assent on 22 June 2021.
It is not just a matter of adding two members, if you are considering expanding your fund, you will need to consider things such as what your fund’s trust deed allows, the structure of your fund and its reporting requirements.
Redwood’s view is that there will not be a large take up in the short term however it will benefit larger families. We welcome the measure to provide flexibility for SMSFs to lower superannuation fees and provide the ability to pool super balances and invest in different asset classes in line with their stated diversified investment strategy, a matter the ATO has been focused on in recent years.
Some State and Territory laws restrict the number of trustees a trust can have. Because an SMSF is a type of trust, your fund may be impacted by these restrictions. To avoid this issue, you can set up your SMSF with a corporate trustee and each member as a Director of the corporate trustee.
It is important to seek professional advice and check State or Territory law restrictions before registering or expanding your fund.
The change to six members is fresh and at the date of writing the article, the ATO is in the process of updating their systems to allow six members, it may be some time before this is allowed through the Australian Business Register (ABR). We recommend you wait until the ABR is updated before you register or update your fund with more than four members.
Disclaimer – The content has been prepared by Redwood Wealth Pty Ltd & Redwood Advisory Pty Ltd without taking account of the objectives, financial situation or needs of a particular individual and does not constitute financial product advice. This article should not be considered personal financial advice as it is intended to provide factual information only. Ivan Filipovic is an authorised representative of First Mutual (AFSL 423710). Redwood Wealth is a Corporate Authorised Representative of First Mutual (1244359)