Considerations regarding the membership of your SMSF

Consider the following when deciding on who will be a member of your fund:

• Eligibility – check that your membership meets the superannuation rules, and that the members are eligible to be trustee. Refer here for more discussion. For example:
  (a)   the maximum number of members is four;
  (b)   you generally cannot be a member of the same fund as your employer, unless you are related; and
  (c)   undischarged bankrupts are not permitted to be fund members.
• Relationship breakdown – choose your fund members carefully. According to ASIC, some SMSF relationships are at a higher risk of failing, including:
  (a)   four friends;
  (b)   two unrelated couples;
  (c)   business partners; and
  (d)   adult siblings.
• Residency of the fund members – your SMSF only qualifies for tax concessions if your SMSF is an ‘Australian Superannuation Fund’. Check whether any proposed members intend to travel or live abroad for an extended period. This may result in your SMSF being liable for substantial taxes if the overseas stay result in your fund no longer being an ‘Australian Superannuation Fund’ – this point is discussed in more detail here.
• Trustee responsibilities – ensure trustees are aware of their responsibilities. Trustees are responsible for holding and investing the fund’s assets for the benefit of the member’s retirement. Furthermore, the trustees are also responsible for ensuring the fund complies with its obligations

Refer here for more discussion on the points outlined above.