“We often get asked by our clients who are contemplating establishing an SMSF whether they can admit a child member to their SMSF,” Ms Wang said.

“While it is not uncommon to admit a child member to join your SMSF, there are a number of issues to consider first before going down this avenue.”

Ms Wang used the example of Bob and Barbara, who want to admit their 17-year-old son, Ben, as a member of their SMSF.

She said Bob and Barbara would need to firstly consider whether their fund’s trust deed permits the admission of a child as a member, and if this was prohibited, they would need to change the wording of the deed to allow Ben to be admitted to the fund.

“If the rules are silent on the issue, then it might be appropriate to amend them to specifically permit the admission of a child member in order to put the issue beyond doubt,” Ms Wang said.

She said the couple would also need to consider the investment strategy of their SMSF, which may need to be revised given Ben was at a different stage of life.

“The child member’s investment strategies would be materially different from those of his parents,” Ms Wang said.

A more complex issue was how the child would fulfill their director duties given they were underaged. Ms Wang said a parent or guardian would need to step into this role on Ben’s behalf, meaning they would need to receive a copy of the fund PDS, sign membership applications for Ben and provide his tax file number to the ATO.

Ben’s chosen parent would also need to be appointed as director of the fund before Ben was admitted as a member of the fund; however, in this case, both Bob and Barbara were already directors.

There were also several options available to Ben once he turned 18, depending on how much he wanted to be involved in the fund.

“An underaged member must be appointed as director of the corporate trustee within six months of their 18th birthday to ensure the trustee structure meets the requirements of the SIS Act,” Ms Wang said.

“Alternatively, Ben could appoint Barbara as his superannuation attorney. [He] would need to execute an enduring power of attorney to adopt this course and it would need to be restricted to superannuation matters.”

Another option open to Ben was to appoint Barbara as his alternate director, Ms Wang said.