There is an increased possibility legislation to increase the maximum number of SMSF members from four to six will pass through parliament before the federal election is called, according to an SMSF technical expert.
SuperConcepts technical services and education general manager Peter Burgess told the SMSF Association National Conference 2019 held last month in Melbourne that given legislation to expand the maximum number of SMSF members was introduced into parliament last week, the sector may see the six-member fund measure come into effect before the government announces an election date.
Burgess also noted the bill has been referred to a Senate economics committee, which is due to report back to parliament on 26 March.
“It seems to me the government will have one last crack at getting this bill through when both houses of parliament meet again and sit again in the first week of April,” he said.
“Now given the government has introduced this bill into parliament, it suggests they’re feeling pretty confident they can get this bill passed before the election is called.”
While the measure may not get the backing of the opposition, he suggested it might receive support from the minor parties, particularly if they oppose Labor’s proposal to scrap imputation credit refunds for certain retirees.
“Because it has been pointed out, of course, if we allow extra accumulation members into the fund, the fund should have excess franking credits and therefore is less likely to be impacted by Labor’s proposal to do away with excess franking credits,” he said.
In terms of the particulars of the legislation, he pointed to the explanatory material that said some states prohibit more than four individual trustees in a fund.
Trustees need to be mindful of state legislation and should consider establishing a corporate trustee if this is the case, he advised.
He also warned of a possible change in the balance of power in an SMSF if the bill passes as there is an increased likelihood of adult children outnumbering the parents in the fund.
“Without careful planning that can give rise to some unintentional outcomes for SMSFs,” he said.
The bill now awaits a second reading in parliament.''