Speaking at a lunch in Sydney, HLB Mann Judd director of superannuation Andrew Yee said while the ATO statistics show that the rate of SMSF establishments for the 25 to 34-year-old age bracket has remained fairly steady in recent years, this may increase with the introduction of the $1.6 million transfer balance cap and total superannuation balance.
“If you think about wealthy parents that are already over the $1.6 million, they might decide to allocate some of the contributions they were planning to contribute towards their own superannuation towards their children’s super fund instead,” said Mr Yee.
“So you might find that these people set up funds for their children and allocate funds that way.”
Mr Yee said this could already be happening, with a lot of the younger trustees that are setting up SMSFs in that age bracket earning a relatively low income.
“I can see where these young people are setting up SMSFs – their income is quite low, so you have to wonder how they’re getting the money to set up these funds, so it could be that they’re be subsidised by their parents,” he said.
The risk with the strategy is from creditor attack – most likely, matrimonial property split. Safeguards need to be included as super is a (financial) resource.