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Irina Hollander & Associates Pty Ltd Chartered Accounts

Joining your parents SMSF (“Self-managed superannuation fund”) is it a good idea?

I am being asked this question quite often. It could be a seemingly attractive thought to join an existing fund and as a consequence not to have to spend on its formation. The  answer to this popular question is: “It depends on your and your parents’ circumstances and the other reasons behind this decision”.

Example 1. You are a small business owner in your 30s in need of business premises. In fact, not having the premises to operate your business from significantly hinders growth of your business. Your own superannuation savings are low.  Though your parents do have an SMSF, they do not plan to rely on superannuation savings to finance their retirement. They have investment properties outside of super delivering rental income or up for sale.

This is when joining parents’ SMSF could be great, as the SMSF may be in a position to acquire an office suitable for your business to occupy.

Example 2. You are an employee. You are aware that SMSFs can now borrow to invest in property and you think it would be a great idea to join the superannuation savings of your parents with your own to invest in property. While your retired parents do have significant superannuation savings, they think this money is better spent wine tasting in Tasmania or cruising around Pacific. Last thing they would want now is to lock in their retirement spending cash into a single long-term investment asset. Term deposits will now be more attractive to your parents instead.

Though some savings can indeed be achieved by joining your parents’ existing SMFS, the investment strategy of your parents will be vastly different to yours to the extent that their excessively risk averse attitude will impede the growth of your own superannuation balance within the fund.

Should you have a similar dilemma or wish to discuss any other SMSF issues, please contact Irina Hollander CA.


The information provided above is of a general nature only and should not be relied upon as a substitute for specific professional advice.