You must decide on the SMSF members establishing the fund. However, existing members can leave the fund, and/or new members can be admitted at a later time. Also, record the TFNs of all members to ensure the fund can accept contributions for them.
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.
TIP – Complex issues to address before establishment
Other complex membership issues can arise. For example, membership or succession of your SMSF can be involved if you and your spouse have children from previous marriages. If this applies to you, consider seeking specialist advice beforehand so fund membership and succession planning can be structured in a way to minimise disputes in the long run. An SMSF Specialist Advisor can assist you with this.