The government first announced its intention to increase the SMSF member limit in late April but again confirmed this in the budget.
Thomson Reuters senior tax writer Stuart Jones said the measure is intended to provide greater flexibility for large families to jointly manage retirement savings.
“The government's proposal to allow up to six SMSF members may assist those with larger families to implement intergenerational solutions for managing long-term, capital intensive investments, such as commercial property and business real property,” said Mr Jones.
For example, allowing an extra two members provides an opportunity to improve a fund's cash flow by using the contributions of the younger members to make pension payments to the members in retirement phase, without needing to sell a long-term investment.
Should this measure become enacted, Mr Jones said the decision to add extra members should not be taken lightly as it can add complexity to the fund's management and investment strategy.
“A change to the membership of an SMSF will alter the trustee arrangements, and that can impact who controls the fund in the event of a dispute,” said Mr Jones.
This is especially relevant in the event of the death of a member, as the surviving trustees have considerable discretion as to the payment of the deceased's super benefits subject to any binding death benefit nomination.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.