Almost anyone can set up an SMSF together. SMSFs can have up to four members, usually they are all in the same family and the most common combination is you and your spouse/partner or just you if you are single. But there are other scenarios, sometimes people who are in business together set up a shared SMSF, sometimes children belong to their parents’ SMSF and sometimes even people who don’t actually live in Australia right now belong to an SMSF. All of these are perfectly legal but sometimes have extra requirements.
A few things to remember when you belong to an SMSF with other people:
Can I be in business with someone else in the fund?
There is no rule against this and in fact it’s reasonably common. There is just one thing to be aware of, no member of the fund can be an employee of another member unless they are relatives. It’s OK if the two people are both directors of the same company but not if one owns the company and the other works in it. This would only be permitted if the two people were relatives. it’s a good idea to get advice if you think your SMSF might not meet this rule.
Can my children belong to my SMSF?
Absolutely – regardless of how old they are. If the child is under 18, however, they can’t be a trustee. Generally, their parent(s) would be trustees on their behalf. Conversely, if the child is over 18, they must be a trustee unless they’ve specifically agreed to have someone else do it on their behalf by granting them an enduring power of attorney.
Can someone living overseas belong to an Australian SMSF?
Yes. But the fund must still meet three residency rules. Unless you are confident you will be able to meet them you should be careful about setting up your SMSF if any of the members live overseas – give us a call to talk it through if you have any doubts. The rules are:
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