Change to law: minor child member of SMSF with a corporate trustee

[jorgon]

There has been some discussion on a previous thread (see this post) about why it is the case that you can't have a minor child as a member of an SMSF with a corporate trustee.

This is the result of an anomaly in the legislation, and it will soon be amended by the Tax Laws Amendment 2011 (Measures No.9) Bill 2011 which is currently before the Federal Parliament. This will permit a parent or guardian to be a director of a corporate trustee in place of a minor child [an amendment will be made to section 17A(3)(c) of the Superannuation Industry Supervision Act 1993]. It is intended that this amendment will have retrospective effect which will be good news for the many funds who have accidentally been in breach.

 

[pixel]

There has been some discussion on a previous thread (see this post) about why it is the case that you can't have a minor child as a member of an SMSF with a corporate trustee.

This is the result of an anomaly in the legislation, and it will soon be amended by the Tax Laws Amendment 2011 (Measures No.9) Bill 2011 which is currently before the Federal Parliament. This will permit a parent or guardian to be a director of a corporate trustee in place of a minor child [an amendment will be made to section 17A(3)(c) of the Superannuation Industry Supervision Act 1993]. It is intended that this amendment will have retrospective effect which will be good news for the many funds who have accidentally been in breach.

Thanks Jorgon;

I presume the child's membership capacity would be as a beneficiary? Or could they own funds in their own sub-account?
I haven't (yet) delved into that side of SMSF legislation - mainly because my grandchildren aren't Australian nationals or residents. Neitherr can I imagine their parents would be too happy if I were to use SMSF membership as a carrot ...

 

[jorgon]

I presume the child's membership capacity would be as a beneficiary? Or could they own funds in their own sub-account?

Hi Pixel

Well, in effect each member of a superannuation fund (child or adult) has a "sub-account" in the sense that they have an account balance (an amount referable to them).
The word "beneficiary" has certain legal connotations. Strictly, a member of a superannuation fund in accumulation phase is not a beneficiary as such, because there is no right to the funds until the happening of an event (retirement, reaching a certain age or one of the exceptional events which may give a right to withdraw).

 

[nulla nulla]

Aren't the members allowed to transfer their entitlements to another approved superannuation fund if they choose?

 

[jorgon]

Aren't the members allowed to transfer their entitlements to another approved superannuation fund if they choose?

Of course, but there is still no access to the funds.

 

[pixel]

Hi Pixel

Well, in effect each member of a superannuation fund (child or adult) has a "sub-account" in the sense that they have an account balance (an amount referable to them).
The word "beneficiary" has certain legal connotations. Strictly, a member of a superannuation fund in accumulation phase is not a beneficiary as such, because there is no right to the funds until the happening of an event (retirement, reaching a certain age or one of the exceptional events which may give a right to withdraw).

Thanks Jorgon;

of course you're right - apologies for the brain freeze.
I was mixing the concepts of a Family Trust (which I have as well) with an SMSF. Different animals

 

[Julia]

Jorgon, it's good of you to take the trouble to put these changes up on ASF.

 

[jorgon]

The bill has now passed and is now law. And it is retrospective.