SMSF – limit of number of members increased from 4 to 6
This week saw the long awaited Bill passed through the senate giving the green light for SMSF’s to increase their member numbers from 4 to 6. Here’s our brief overview and the pro’s and con’s of this change:
It’s important to think carefully before family members decide to pool their super resources together in one SMSF. Inevitably family members will have varying degrees of investment knowledge, differing views on investment timeframes, how their money should be invested and how decisions should be made. For some families, if this is not managed correctly, it could be a recipe for disaster. On the other hand, for some families, these new rules are exactly the solution they are looking for in relation to boosting their long-term family retirement wealth.
Super Contributions – bring forward rule for non-concessional contributions extended to age 67
The current non-concessional contribution cap is $100,000 per annum (increased to $110,000 on 1/7/2021). However those age 65 or under (at the start of each financial year) may be eligible to make a larger contribution of up to three times the annual cap in one financial year.
This effectively brings forward up to two future years of cap and presents some significant planning opportunities for clients wishing to do a last chance boost to their retirement savings.
In a welcome change, legislation passed the Senate this week increasing the age limit for accessing the bring forward rules to age 67.
This also now aligns with the work test requirements which were extended from age 65 to 67 last year.
It’s important to note that it’s not just your age that’s important to consider whether you are eligible to make a non-concessional contribution. There are also restrictions in relation to your Total Super Balance (TSB) that impacts amounts you can put in to super.
We recommend anyone considering making a non-concessional contribution to super should check with their advisor for personalised advice.
Here’s a handy table from the ATO which summaries these rules for contributions from 1/7/2021: