As we headed into 2019 there was the start of some serious questioning as to whether the budget announcement by the Government to increase the maximum number of allowable members in new and existing self-managed superannuation funds (SMSFs) and small APRA funds (SAFs) from four to six, from 1 July 2019 would occur.
With a limited number of sitting days in February, it was pleasing to see the release of Treasury Laws Amendment (2019 Measures No. 1) Bill 2019 that included that proposed changes to the Superannuation Industry (Supervision) Act 1993 (‘SISA’) and Income Tax Assessment Act 1997 (‘ITAA’).
The purpose of this change was to provide greater flexibility for joint management of retirement savings, in particular those with larger families – funnily, it also helps to as a way to counter Labor’s plan to remove franking credit refunds… but, I digress!
Change to SMSF definition
The key change naturally impacts the definition of a SMSF within section 17A(1)(a), allowing for an increase to a maximum of 6 members.
It should be noted that subparagraphs changes within 35B(3)(a) and (b) will also occur to the number of parties required to sign the Accounts and Statements of the fund as part of the obligations under Division 3 in the SISA.
For a corporate trustee, where it has:
- One or two directors – each of the directors must sign; or
- otherwise – at least half of the directors must sign.
Where the fund has individual trustees:
- if there are only 2 trustees – both of the trustees must sign; or
- otherwise – at least half of the trustees must sign.
Ensure that you check the Deed!
This change, should it be passed by both houses and receives Royal Assent, would impact one of the key definition requirements for an SMSF from 1 July 2019. It is important to note that if the number of members to be appointed within a fund was to occur beyond the current laws of four that the trust deed is not too prescriptive that would restrict membership. In that instance, a trust deed upgrade may be needed to allow for such a change to the governing rules of the fund.
If you want to read more about this change, including tracking of the Bill’s status, you can do so here.
We now wait patiently to see if this change gets over the line…