Latest News

Going solo

  It is well-known that self-managed super is most popular among couples, but 23% are single-member funds.  Speak to your planner today about your SMSF options.

In fact, 70 per cent of SMSFs as at June 2014 had two members - with the vast majority being in a marital relationship.

     

It is not as widely recognised that almost a quarter of SMSFs are single-member funds - 23 per cent to be exact, according to the tax office's statistical report for 2013-14.

Although the SMSFs are permitted to have up to four members - providing an opportunity for, say, adult children to join their ageing parents' SMSF - a relatively small percentage of funds take this course.

ATO statistics show that three and four-member SMSFs each make up four per cent of self-managed funds.

Of course, many investors intentionally setup a single-member SMSF. And many two-member SMSFs may become single-member funds following the death of a member or perhaps with the splitting of super savings following a marital breakdown.

Particularly given that more than 130,000 individuals are the sole members of their SMSFs, it is worth looking at how superannuation law applies to single-member funds.

Under the Superannuation Industry (Supervision) Act, a single-member SMSF must have a corporate trustee (with up to two directors) or two individual trustees. And the sole member must be either a director of the corporate trustee or one of the two individual trustees. 

No doubt as part of their estate planning, numerous members of two-person SMSFs are considering what to do with their super funds should one member predecease the other. Should the fund continue as a single-member SMSF? Much will obviously depend on personal circumstances including perhaps any relevant professional advice received and the level of interest that the surviving member has in self-managed super.

As editor Stuart Jones writes in the Thomson Reuters Australian Superannuation Handbook 2015-16, a former two-person SMSF does not immediately become a single-member SMSF upon the death of a member. Such a fund is given six months to meet the requirements for being an SMSF by appointing a corporate trustee or appointing a second individual trustee.

Discussions about single-member trustees and their trustee requirements may encourage you to think further about what is the most-appropriate trustee arrangement for your SMSF - individual trustees or a corporate trustee. See An SMSF trustee decision for the long, long haul, Smart Investing, September 3, 2015.

By Robin Bowerman
Smart Investing 
Principal & Head of Retail, Vanguard Investments Australia
​20 March 2016

General Advice Warning

The Information on this page has not taken into account your financial situation, needs or objectives. Before acting upon any advice, you should consider whether it is appropriate for you. If the advice relates to a financial product, you should obtain and consider the Product Disclosure Statement before making a decision in relation to the product.

Boston Private Wealth

Suite 46B, Masthead Way
Sanctuary Cove QLD 4212

Boston Private Wealth is a Corporate Authorised Representative of AdviceIQ Partners Pty Ltd. ABN 95 134 016 210 AFSL 332957