Chan & Naylor Tax Consultants list down some recently announced SMSF provisions. Here are several things you need to know.
For one, SMSF can have up to six members in the fund should the legislation pass. The Government has proposed to increase the maximum number of members that an SMSF can have from four to six. This aims to assist families of more than four, who want to invest together in an SMSF. However, they should consider the investment strategies, its control and succession of benefits. It can also attract non-related persons co-investing in an SMSF but an exit strategy must be carefully arranged in case of a fall out.
There are new specific provisions for cryptocurrency as well. Cryptocurrencies, like bitcoin, are CGT assets and SMSFs may acquire, dispose of or invest in these but must comply with the same regulatory requirements that apply to investments in other assets. Buying cryptocurrencies should be aligned with the fund’s strategy and allowed under the SMSF’s deed.
The SMSF should have decisive ownership of the cryptocurrency wallet, separate to any wallet used by a member or trustee personally. It could be a hardware wallet which is dedicated entirely to SMSF crypto investments to avoid the need to remember passwords. SMSF cryptocurrency holdings may be valued through the fair market value obtained from a reputable digital currency exchange. This still leaves some wiggle room, though. Upon payout, the fund can be paid out in specie lump sum subject to tax or a pension income stream in cash.
Meanwhile, the new provisions for the payment of death benefits into a Super Proceeds Trust state that upon death, a member’s benefit may only be paid directly from a super fund to a beneficiary who is a dependent under super law and their legal personal representative. Under Superannuation Industry Supervision Act, dependents eligible to receive a death benefit from super include a spouse, a child, a person who was financially dependent on the deceased just before he or she died and a person with whom the deceased was in an interdependency relationship just before death.
An executor of the estate should be nominated in case the member does not have SIS dependents or wishes to direct their super death benefits to someone other than an SIS dependent. Whether the beneficiary can commence a death benefit income stream, the advantages and disadvantages, taxation and social security and asset protection implications of the estate have to be considered.
Other new SMSF provisions include the TRIS and accumulation and retirement phases being further clarified including commencement in accumulation phase and conversion to retirement phase when a NIL cashing restriction condition of release is met and restrictions on the trustee’s ability to receive contributions that would exceed the Total Super Balance. The ability to order a QROPS approved trust deed as part of the Fund set up for the same fee as a standard deed has also been clarified.
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