A Senate committee reviewing a proposal to increase the maximum number of members allowable in an SMSF from four to six has recommended it be passed by Parliament, despite opposition from Labor Party committee members.
The Treasury Laws Amendment Bill 2019 was introduced into the House of Representatives on 13 February and was referred to the Senate Economics Legislation Committee the next day.
In the view of the committee, by allowing groups of five or six people to establish an SMSF or small Australian Prudential Regulation Authority fund, the proposed amendments in schedule 1 of the bill will provide increased flexibility for Australians, particularly those with larger families, to manage their retirement savings.
The committee also agreed with the views of the SMSF Association – the only group to make a submission on the issue – in support of the measure.
In its submission, the association said: “From an intergenerational perspective, if children have knowledge about and are part of how their parents’ affairs, finances and superannuation are being managed, this familiarity can facilitate improved and more timely estate planning across generations of families. For example, including adult children in their ageing parents’ SMSF could help when making administration and investment decisions for the fund.”
In relation to SMSF fees, the association noted increasing the maximum number of members is unlikely to have a real effect “because SMSF fees are typically charged on a fixed administration basis regardless of the number of members and without consideration to the balance of the superannuation account”.
However, the two Labor senators on the six-person committee did not support the change, saying the government has not provided an adequate or compelling policy rationale for increasing the SMSF membership limit.
The two senators, Chris Ketter and Jenny McAllister, said: “No detailed analysis has been provided by the government, nor has any public consultation been conducted by Treasury on this measure as far as Labor senators are aware.”
Ketter and McAllister also said the Productivity Commission, in its recent report, did not make a finding in relation to SMSF membership limits.
“As no cogent policy rationale for the change has been provided by the government and in the absence of a Productivity Commission recommendation about membership, Labor senators believe that the schedule should be removed from an otherwise non-controversial package of bills.”
