‘Limited time’ left for passage of 6-member SMSFs
With the time frame for the government to pass the six-member SMSF measure fast dwindling, SMSFs planning to employ this as a strategy to offset their excess franking credits may have to rethink their plans.
With federal election expected in either April or May, there are only a few parliamentary sitting days left for the government to pass its measure to extend the maximum number of members allowed in an SMSF from four to six.
In an online article, SMSF Alliance principal David Busoli said that the increase in the SMSF member limit from four to six will require either the return of the government at the next federal election or the introduction and passing of the legislation in the few days that Parliament will sit before the election.
“Labor will certainly not entertain an increase in member numbers, particularly when the most useful ramification of the change will be to allow younger members to offset their contribution tax against the excess franking credits that will cease to be refunded to parent pension recipients under Labor,” Mr Busoli said.
The Turnbull government first announced its plans to increase the SMSF member limit back in April 2017. However, the measure gained further appeal when Labor unveiled its proposal to remove cash refunds for excess dividend imputation credits.
The removal of dividend imputations will have the most impact on those who pay little or no tax such as self-funded SMSF retirees as they have no tax to offset it against.
Inviting adult children with accumulation accounts into the fund is therefore appealing to some SMSF trustees as they can increase the taxable income of the fund and offset franking credits.
Mr Busoli said that this may motivate the government to push this measure through in the limited time it has left.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
