The recently passed legislation allowing six-member SMSFs and the relaxing of the residency rules announced in the 2021 federal budget in combination have the potential of making the inclusion of trustee children in an SMSF more appealing, a technical manager has said.
“The concept of expanding the self-managed super fund to meet that definition of the Australian super fund, [while still having] the central management and control requirement, I see as a real positive,” SuperGuardian education manager Tim Miller told attendees of a recent webinar.
Miller pointed out the legislation already passed and the budget measure will fix a situation currently preventing adult children from joining their parents’ SMSF, the situation being when the children are looking to work overseas for a few years.
“Right now we know that that’s problematic because if the parents are in retirement phase and the children are in accumulation phase, then they’re going to fail the active member test as greater than 50 per cent of the active assets belong to non-resident members,” he noted.
“But come 2022/23, if we see the changes to the Australian super fund definition, then we’re going to be able to satisfy the central management and control test because the parents [will perhaps after travelling overseas] be enjoying their retirement … while the children looking to work overseas [won’t have] any prohibition on their capacity to contribute to the fund.
“I think that’s a huge positive because then [the children] will know where the fund is being managed and they can still be involved in the decision-making process with their parents.”
He revealed the passing of the legislation allowing SMSFs to service a maximum number of six members has already generated more conversations he is having about the family superannuation fund and its extension, the bloodline super fund.