SMSFs that want to have six members but are limited by state laws or deed conditions can add extra members using specific exceptions that were retained when the law changed earlier this year.
Heffron head of SMSF technical and education services Lyn Formica said changes to allow SMSFs to have up to six members occurred within the Superannuation Industry (Supervision) (SIS) Act and still required that every member was a trustee of the fund or a director of a corporate trustee.
Speaking during a recent webinar, Formica said while the SIS Act changes applied nationally, they had no impact on state and territory-based trust laws in New South Wales, Queensland, Victoria, Western Australia and the Australian Capital Territory, which have a limit of four members in a trust.
“In the past there were a number of basic conditions to be an SMSF and this included members had to be individual trustees of the fund or directors of a corporate trustee,” she said.
“Funds, however, may have satisfied an exception where a member was not trustee or director of a corporate trustee where a member was a child under 18 and a parent or guardian could be the trustee for them, or a member had given an enduring power of attorney to someone who is trustee or a director of the corporate trustee in their place.
“Those exceptions still come into play when dealing with six-member SMSFs.
“In those states that do not allow six trustees, a fund could use a corporate trustee or use the exceptions.
“An SMSF could have someone who is a member but not a trustee through the use of an exception and in those situations a fund could have six members with four individual trustees if two of those members are minors and one of the trustees is their parent or guardian.”