End arbitrary four-member SMSF restriction
Accountancy firm Chan & Naylor has called for an end to what it calls an arbitrary maximum limit of four members to each self-managed super fund (SMSF).
“The retirement savings of everyday Australians are being held back by this inflexible approach,” said Chan & Naylor chief executive Sal Carrero.
“The Government should be encouraging the expansion of the SMSF sector at a time when people are questioning the adequacy of their retirement savings,” he said.
With the hit to superannuation savings during the global financial crisis, many Australians now prefer to have more control over their investments through a SMSF, which allows them to invest in assets they feel more comfortable with – such as residential real estate.
Chan & Naylor director Ken Raiss said the current rules limiting SMSFs to four members were unjustified and penalised large families.
A solution would be to allow more members into a SMSF provided they were part of a nuclear family unit and met the definition of ‘spouse’ or ‘child’. The term ‘spouse’ was already legally applied to same-sex and de facto couples, so no families would be penalised by the expanded definition, he said.
Some Chan & Naylor clients had been forced to start up two separate SMSFs to accommodate all family members, adding unduly to the cost burden and decreasing efficiency, he said.
Rather than increasing the limit to another arbitrary number such as six or eight, the family member definition would ensure that no family was penalised for having too many children. Additionally, by not including extended family such as aunts and uncles, the definition also ensured the number wouldn’t become too large.
“[Changing the definition] would cost the Government nothing, reduce the costs for compliance for larger families, with greater flexibility, greater efficiency and economies of scale,” Raiss said.
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