“If the proposed amendment is passed into law, the main change is to the signature requirements for documents and various issues which will currently relate to funds with [fewer] than five members, such as the acquisition of some assets from related parties, and the in-house asset rules, as they apply to small funds,” he stated.

Mr Colley said with most funds containing one or two members at the moment, no one is expecting a torrent of new funds following the increase to six members.

“Nonetheless, it provides greater flexibility for families with more than four members to benefit from the change. In some situations, there may be special reasons to have up to six members,” he noted.

Some of the main advantages of the proposed change, he said, include larger families being catered for and a reduction in operating costs compared to a family that would require two or more funds to achieve the same outcome.

Another advantage he said is “a greater ability for the SMSF to qualify as an Australian superannuation fund when one or more members travel overseas for a prolonged period, saving in administration costs”.

There are also disadvantages to consider, he said, such as the difficulty in the administration of an SMSF with individual trustees and reduced efficiencies in decision-making.

It may also make the overall management of the fund, such as the decision of trustees or members to appoint or remove trustees.

In terms of fund investments, Mr Colley explained that the positives include the additional investing power of an SMSF with six members, which would allow the fund to have greater negotiating and purchasing power, and taxation strategies to be implemented more efficiently.

“The negatives around fund investments would be the need for it to be managed properly. In some situations, investment considerations may be indecisive, investment choice may vary significantly due to the members’ ages, and naming conventions may hold up the final decision,” he warned.

The main positives from a benefit payments perspective, Mr Colley explained, is that estate planning can be streamlined with a greater number of members and the ability to assist with the intergenerational transfer of wealth.

“This can provide taxation advantages as family members pass through the superannuation fund,” he noted.

“However, some negatives may arise from the increase in members, such as relationship breakdowns between the members in the fund, lack of clarity when it comes to the distribution of death benefits to nominated beneficiaries, and potential financial abuse.”