Must all SMSF members be trustees?

Must all SMSF members be trustees?It is the general rules that all members of a SMSF must also be trustees (or directors of the corporate trustee), however as this is Superannuation there is always some exceptions.

If a fund doesn’t meet the definition of a SMSF under the SIS act it risks losing it’s complying status – being made a non-complying fund.

Section 17A of the SIS Act sets out the basic elements of the SMSF definition, including that where the trustees are individuals, each member is a trustee; or where there is a corporate trustee, each member is a director.

However s17A(2) sets out additional rules for ‘single member funds’, which include that there can trustees/directors of the fund in addition to the single member. A fund will still meet the definition of a SMSF where there are only two trustees/directors, one of them is the member and the other is a relative of the member, or another person provided the member is not an employee of that other person.

Section 17A(3) also sets out rules for when a Legal Personal Representative (LPR) may be the trustee/director of a fund without the fund failing to meet the definition of a SMSF, including:

  • where the member has died and the LPR becomes trustee/director until the payment of the death benefits
  • the member is under a legal disability
  • the LPR has an Enduring Power of Attorney (EPOA) in respect of the member

Additionally s17A(3)(c) allows for the parent or guardian of a minor who does not have an LPR to be the trustee/director in their place. Note that prior to the passage of the Tax Laws Amendment (2011 Measures No.9) Act 2012 in March 2012 this exemption only applied to SMSFs with individual trustees.

An EPOA can also be useful where the fund has issues with the residency requirements of a complying super fund.

Note that a 6 month grace period may apply to an SMSF under s17A(4) where the fund fails to meet the definition of a SMSF, though this doesn’t apply in the case of new members of the fund.


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