Moves to allow the creation of six-member SMSFs have taken a step forward after the federal government introduced legislation into parliament to make that change.
The Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 was introduced into the Senate on 2 September, where it progressed to a second reading before debate was adjourned.
The bill will amend the Superannuation Industry (Supervision) (SIS) Act, Corporations Act, Income Tax Assessment Act and Superannuation (Unclaimed Money and Lost Members) Act to increase the maximum number of allowable members in SMSFs from four to six, and would apply to SMSFs as well as small Australian Prudential Regulation Authority funds.
The amendments were first proposed in the 2018 federal budget and had previously been introduced into parliament in 2019 as part of an omnibus bill that also dealt with excise tax on craft beer, but were dropped at that time and then subsequently removed from the ATO’s work schedule.
Earlier this year, Assistant Treasurer Michael Sukkar indicated the government would continue to push forward with its plans for six-member SMSFs when he announced the start date for the measure had been moved from 1 July 2019 to the date of royal assent of the enabling legislation.
This date, however, has been modified slightly, according to the bill, which states the amendments would now apply from the start of the first quarter that commences after the act receives royal assent.
Smarter SMSF chief executive Aaron Dunn said while the amendments would change the definition of an SMSF under the SIS Act, there would also be changes to the number of parties required to sign the accounts and statements of the fund as part of its obligations under Division 3 of the SIS Act.
Dunn pointed out where an SMSF had a corporate trustee with only one or two directors, each of them must sign the documents, otherwise at least half of the directors must sign.
Similar conditions would also apply where a fund had individual trustees and where there were only two, both must sign, otherwise at least half of the trustees must sign the accounts and statements.
Dunn also highlighted SMSF trust deeds would need to be reviewed if the amendments become law and an SMSF planned to increase its members to five or six.
“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.
The SMSF Association welcomed the introduction of the bill, stating the increase in numbers would help larger families include all their family members in their SMSF.
SMSF Association chief executive John Maroney said: “Although the number of funds that take advantage of this policy change may be small, the increased maximum has our support because it brings greater flexibility and choice to the SMSF sector.”