The measure to increase the number of members allowed in an SMSF from four to six was introduced into Parliament this week in Treasury Laws Amendment (Self-Managed Superannuation Funds) Bill 2020.
The measure was first announced in the lead-up to the 2018–19 federal budget and was previously introduced into Parliament as part of the Treasury Laws Amendment (2019 Measures No. 1) Bill 2019.
However, with Labor opposed to the measure, the Liberal Party agreed to remove the amendment to increase the SMSF member limit in order to pass the other measures contained within the same bill.
Smarter SMSF chief executive Aaron Dunn said, importantly, the measure is contained in a standalone bill this time.
“Last time, [it] was lumped into a bill to also reduce excise on craft beer — thankfully, craft beer became cheaper,” he said.
The purpose of this change, Mr Dunn explained, is to provide greater flexibility for joint management of retirement savings, in particular those with larger families.
“By and large, the proposed changes are quite simpl[e] and reflect what was previously proposed with the changes earlier in 2019,” he said.
Mr Dunn noted that the bill contains changes to the number of parties required to sign the Accounts and Statements of the fund as part of the obligations under Division 3 in the SISA.
“For a corporate trustee, where it has one or two directors, each of the directors must sign; or otherwise, at least half of the directors must sign,” Mr Dunn explained.
“Where the fund has individual trustees, if there are only two trustees, both of the trustees must sign; or otherwise, at least half of the trustees must sign.”
For those who are considering increasing the membership of their fund to five or six members, Mr Dunn said a key area of consideration will be the fund’s trust deed.
“If the deed is prescriptive on the number of allowable members, a trust deed upgrade may be needed to allow for such a change to the governing rules of the fund,” he said.
Cooper Grace Ward Lawyers has also previously flagged some of the trust deed updates that may need to be made if the six-member limit is legislated.
“Most trust deeds don’t let you have more than four members because a lot of them follow the SIS Act, which says that you can’t have more than four. So, from our point of view, most deeds are going to need to be updated if you’re looking to have six members in the fund,” Cooper Grace Ward Lawyers partner Clinton Jackson stated last year.
“There are a few things that you need to be careful about. In Queensland, for example, you can’t have six individual trustees, you can only have four.”
