SMSFs are an ideal vehicle for members with children under the age of 18 to receive contributions from part-time work due to the oversight parents can exert and the relatively low cost to administer their accounts within the fund, a superannuation legal specialist has claimed.
SuperCentral superannuation special counsel Michael Hallinan said super law changes that took effect from 1 July 2022 meant children who were under the age of 18 and members of their parents’ SMSF could receive super guarantee (SG) contributions into that fund and continue to do so after the age of 18 regardless of what they earnt.
“[Since that change], employers need to pay super for their employees who are 18 or more even if they work less than 30 hours in a week,” Hallinan said.
“This is the result of the $450-per-month minimum threshold for super guarantee payments being removed.
“These changes again raise the issue of having your children as members of your SMSF.”
He noted teenage children under 18 who routinely do not work more than 30 hours a week would receive no SG contributions, but would if they took any form of employment that passed that threshold, such as holiday work.
“The ATO is clear that super is payable in respect of any week where the 30-hour test is met, so now they’ll start to receive annoyingly small amounts of superannuation as the $450-per-month minimum threshold no longer applies,” he added.
“The question then is: who should your child’s super be paid to? It seems that it could be convenient, cost-effective and even parentally responsible to have that super paid into your existing SMSF.
“In your SMSF the costs can be controlled more carefully, will be shared with the other fund members and can be proportional to the size of their account. [This can] save administration/investment costs eating away at your child’s small super balance in a public offer fund.”
He pointed out it was possible for a minor child to join an SMSF if undertaken by their parent, but would need to be allowed under the terms of the trust deed, with further consideration given as to their status within the fund.
“[When they turn 18], they then have the choice as to where to put their super and can choose to stay in the SMSF or roll over their member benefit to another fund – public offer, industry or another SMSF,” he said.
“If they choose to remain in your SMSF, they will have to become a trustee or a director of the corporate trustee and can no longer rely on you to represent them.”
