Parents subsidising SMSFs for adult children, says mid-tier
In light of the reforms to super, one mid-tier firm predicts that greater numbers of parents will set up SMSFs for their adult children and make contributions on their behalf.
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.
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 has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.