Members

 

 

What is a Member?

The Members of an SMSF own the SMSF assets.  Only Members of an SMSF can contribute to the SMSF.  Members of an SMSF must also act as the Trustees for the SMSF meaning that the Members also control the SMSF.  Under the ESUPERFUND Platform, an SMSF can have a Maximum of 4 Members.

 

 

All Trustees automatically appointed as Members of the SMSF

ESUPERFUND automatically appoints all Trustees of the SMSF as Members of the SMSF when you apply to establish an SMSF with ESUPERFUND.  Importantly a Member will only have an entitlement in the SMSF if they contribute to the SMSF.  If they do not contribute to the SMSF the Member will have no entitlement to the SMSF (see discussion below) and they are considered a NIL Balance Member.  Being a NIL Balance Member is the equivalent of not being a Member of the SMSF as in both cases the NIL Balance Member will have no entitlement in the SMSF.      

 

 

Members have a Proportional Interest in SMSF Assets

All Members of an SMSF have a proportional interest in the SMSF assets based on the Contributions and Rollovers made to the SMSF and any Withdrawals made from the SMSF.  This means that if one Member contributes 100% of monies to the SMSF and a second Member contributes no monies, then the Member making the total contributions to the SMSF will own 100% of the SMSF.  Similarly if one Member contributes say $60,000 to the SMSF and the other Member contributes say $40,000, then Member 1 will own 60% of the SMSF Assets and Member 2 will own 40% of the SMSF Assets.  Each Members percentage or proportional interest in the SMSF Assets is constantly changing.  That is each time that a Member contributes or withdrawals monies from the SMSF their proportional interest in the SMSF changes.

 

 

ESUPERFUND tracks each Members Proportional Entitlement in the SMSF

ESUPERFUND tracks each Members proportional entitlement in the SMSF by allocating every Rollover, Contribution and Withdrawals to a specific Member.  This is a legal requirement.  At financial year end as part of the Annual Compliance Process, ESUPERFUND will send to each Member a Member Statement detailing their respective Super Benefit in the SMSF.  How we track Contributions, Rollovers and Withdrawals and allocate them to a specific Member is detailed below. 

 

 

Tracking and allocating Rollovers to Members

Each Rollover must be allocated to a specific Member as part of the annual compliance process.  This is a legal requirement.  Each time you Rollover monies from another Superfund into the Transaction Bank Account, that Superfund must provide you with a Rollover Statement.  In order to determine which Member has made the Rollover, ESUPERFUND will require the Rollover Statement issued by the previous Superfund.  This will have all the information about the Rollover including the Member receiving the Rollover and the amount rolled over.  You do not have to provide the Rollover Statement immediately on receiving it.  ESUPERFUND will request the Rollover Statement by 31 August after the end of the Financial Year as part of the Annual Compliance Checklist process.

 

 

Tracking and allocating Contributions to Members

All Contributions made to your SMSF whether in cash or via a transfer of assets must be allocated to an SMSF Member.  This is a legal requirement.  Typically the Member making the Contribution will be detailed on the Transaction Bank Account Statement.  To the extent that the narration on the Bank Statement is insufficient, you will be asked to confirm on whose behalf the contributions have been made using an annual checklist which generally made available to SMSF clients by 31 August.  You do not need to send us confirmation at the time each contribution is made. This information is only required annually and we will guide you through the process and prompt you when information is required from you. 

 

 

Tracking and allocating Concessional and Non Concessional Contributions to Members

All Contributions made to your SMSF whether in cash or via a transfer of assets must be allocated to an SMSF Member.  In addition the Contribution Type must be recorded.  This is a legal requirement.  Typically the Member making the Contribution will be detailed on the Transaction Bank Account Statement.  However the type of Contribution will not be able to be determined solely from the Bank Statement.  Accordingly you will be asked to confirm whose behalf the contributions have been made and the Contribution Type made for each Member using an annual checklist which generally made available to SMSF clients each year by 31 August. You do not need to send us confirmation of the Contribution Type at the time each contribution is made. This information is only required annually and we will guide you through the process and prompt you when information is required from you.  In addition please note that if you have claimed a Tax Deduction for a personal Contribution, we will require a completed ATO Tax Deduction Form evidencing the Tax Deduction.

 

 

Tracking and allocating Earnings to Member's Accounts

Your SMSF Earnings are allocated to each Member on a proportional basis based on each Members percentage interest in the SMSF as detailed above.  This is done by ESUPERFUND automatically as part of the annual compliance process and no action is required by you.  Importantly as part of the annual compliance process ESUPERFUND will prepare a Member Statement for each Member of the SMSF.  This is a legal requirement.  The Member Statements are included in the annual compliance documents completed for clients each year and must be approved by you as the SMSF Trustee before lodgement with the ATO.

 

 

Tracking the Tax Components that make up a Member's SMSF Benefit

Each SMSF Member Benefit is comprised of a "Taxable Component" and "Tax Free Component".  The Tax Free Component typically comes from after tax personal "Non Concessional" Contributions.  The "Taxable Component" typically comes from "Concessional Contributions", which include Employer Contributions and Salary Sacrifice Contributions.  Importantly ESUPERFUND tracks each component and provides a breakdown in each Member's Member Benefit Statement (see below).  No action is required by you. 

 

 

Tracking a Member's Accumulation and Pension Account

Before you commence a Simple Account Based Pension (SABP) or TRIS, your SMSF Benefit is recorded in your "Accumulation Account".  When you commence an SABP/TRIS, your SMSF Benefit is recorded in your "SABP Account/TRIS Account". These are Accounting Entries in your SMSF and do not require separate Bank Accounts for each Account Type.  Unlike Retail Funds, an SMSF can accept Contributions (subject to the normal Contributions Rules) and Rollovers before or after a Pension has commenced.  These Contributions and Rollovers continue to be made to the Transaction Bank Account setup for your SMSF.  When you make additional Contributions and Rollovers to your SMSF these Contributions and Rollovers are allocated to your "Accumulation Account".  This will mean that you will have two "Accounting Accounts" at the same time in this case, namely an "SABP Account/TRIS Account" paying your Pension and an "Accumulation Account".  The difference between each Account is the "SABP Account" does not pay tax on earnings and capital gains but the "Accumulation Account" and "TRIS Account" do pay tax on earnings and capital gains at up to 15%.  Importantly ESUPERFUND tracks each component and provides a breakdown in each Member's Member Benefit Statement (see below).  No action is required by you. For more information on Member’s Accumulation and Pension Account, please click here.

 

 

Tracking Withdrawals

Each withdrawal must be allocated to a specific Member as part of the annual compliance process.  This is a legal requirement.  Typically the Member making the withdrawal will be detailed on the Transaction Bank Account Statement. To the extent that the narration on the Bank Statement is insufficient, you will be asked to confirm which Member made the withdrawal using an annual checklist which generally made available to SMSF clients each year by 31 August. You do not need to send us confirmation at the time each withdrawal is made. This information is only required annually and we will guide you through the process and prompt you when information is required from you.  Remember you can only make withdrawals from the SMSF if eligible. For more information on access to super benefits, please click here.

 

 

Annual Member Statements

Importantly as part of the annual compliance process ESUPERFUND will prepare a Member Statement for each Member of the SMSF.  This is a legal requirement.  The Member Statements are included in the annual compliance documents completed for clients each year.  The Member Statement will summarise all Contributions, Contribution Types, Rollovers, Tax Components, Preservation Components and withdrawals made from the SMSF by each Member.  The annual Tax Return for the SMSF can only be lodged with the ATO once you have approved the Member Statements provided to you.

 

 

Member Benefits and Death

Your Super Benefit does not form part of your estate on your death. This means that your Super Benefit will not necessarily be distributed in accordance with your "Will" on your death. When you die your Super Benefit will be distributed in accordance with the provisions of your SMSF Trust Deed. The SMSF Deed used by our office states that to the extent that no specific nomination is made to the SMSF prior to your death, your Super Benefit may be distributed in accordance with the discretion of the remaining Trustees of the SMSF. This may or may not comply with your intentions and may result in an unfavourable tax outcome. In addition both Trustees may disagree on how to distribute your Super Benefit. To ensure that your Super Benefit is distributed in accordance with your wishes you are permitted to make a Death Benefit Agreement. A Death Benefit Agreement "binds" the Trustees of your SMSF to pay your Super Benefit as you intend and not at the remaining Trustees discretion. For more information on Death Benefit Agreement, please click here.

 

 

Adding and Removing Members

Once your SMSF is established and the Members appointed, there are circumstances where you may need to add or remove the Members. For more information on change of member process, please click here.