The Bill which increases the maximum allowable number of members in an SMSF to six (the current maximum is four members) has passed both houses of Parliament and is now law. From 1 July 2021, SMSFs can now have anywhere between one to six members. The usual trustee/member rules (which broadly require each member to be a trustee/director of the trustee and vice versa) continue to apply. The new maximum of six members will allow, for example, larger families to include all their family members in their SMSF.

Things to consider with 5 or 6 member SMSFs include:

That the SMSF trust deed allows more than 4 members (many deeds hard code the maximum members to 4)
The importance, and in some cases the necessity, of having a corporate trustee
For unrelated persons in the same SMSF, having an exit strategy if there is a dispute
Being prepared for the death of a member and liquidity issues with paying out death benefits
How the control of an SMSF is structured, for example, an SMSF with 2 parents and 4 children will result, without proper structuring, in the children outvoting the parents

Also passed yesterday was the Bill extending the bring forward age up to 67. This will allow individuals aged 65 and 66, subject to the amount of their total super balance, to make up to three years of non-concessional contributions under the bring forward rule (previously only available to individuals under age 65 during the relevant financial year). This change is effective from 1 July 2020 onwards.

The recent May Federal Budget announcements also included a proposal to increase the bring forward age to 74. That is, individuals up to age 74 will be able to use the bring forward rule without having to meet the work test, provided they satisfy the usual eligibility criteria. Most of the budget measures (including this one) are due to take effect from 1 July 2022.

Phil Broderick
Principal
M +61 419 512 801 | T +61 3 9611 0163
E: pbroderick@sladen.com.au

Philippa Briglia
Senior Associate
T +61 3 9611 0173
E pbriglia@sladen.com.au