Superannuation for Under 18’s: What your kids should know about Super and SMSF’s…
Getting a head start on your financial future is a smart move—especially when it comes to superannuation. Even if retirement feels a lifetime away, setting up super early can have major long-term benefits. The sooner you begin, the more potential your super has to grow and compound over time.
When Does a Minor Start Receiving Super Contributions?
Minors generally begin receiving super once they enter the workforce and meet specific conditions.
Are minors entitled to super contributions?
Yes—if they work more than 30 hours per week, employers must pay super contributions under SG rules.
If they work less than this, contributions are not legally required.2024–25 SG Rules
Under 18: Must work 30+ hours per week to be eligible.
18 and older: Eligible regardless of hours worked.
Current SG rate: 11.5% of ordinary time earnings, which includes wages, bonuses, and paid leave.
For those considering a Self-Managed Super Fund (SMSF), it’s important to understand that all members are usually required to be either trustees or directors (for corporate trustees). This ensures everyone involved in the fund plays an active role in managing it. However, individuals under 18 (minors) are not permitted to act as trustees, and special rules apply under the Superannuation Industry (Supervision) Act 1993 (SIS Act).
Rules for Adding a Minor to an SMSF
A minor can be admitted as a member of an SMSF if specific legal requirements are met. Here’s what you need to know:
Membership Eligibility
The minor must typically be the child of an existing fund member.
All criteria under the SIS Act must be fulfilled.
Legal Representation
As per SIS Act Section 17A(3)(b) and (c), a legal personal representative must act on behalf of the minor.
This representative could be a parent or guardian, who must serve as trustee or corporate trustee director in the minor’s place.
Application and Acceptance
The trustee can approve a minor’s membership if a formal application is submitted.
This application must be signed by the minor’s parent or legal guardian.
Important Note:
If a minor does not have an appropriate representative acting as trustee, the SMSF could be classified as non-compliant.
Trust Deed Considerations for Minor Members
Before admitting a minor, review your fund’s trust deed to ensure compliance and clarity:
Child Member Admission: Confirm if the deed permits under-18 members. If not, an amendment will be required.
Investment Strategy: Update the strategy if necessary to reflect the unique profile of a younger member.
Death Benefit Instructions: Clearly outline how benefits will be allocated in the event of the minor’s death.
SG Compliance: Ensure provisions exist to meet Superannuation Guarantee (SG) obligations for eligible minors.
Transitioning to Trustee After Turning 18
When a minor turns 18, they must take on formal trustee responsibilities within six months. This involves:
Becoming a Trustee or Director: File ASIC Form 484 to be appointed as trustee or director.
Director Identification Number: Obtain a Director ID through the Australian Business Registry Services (ABRS).
SMSF Deed Update: Amend the deed to reflect the individual’s new role.
ATO Notification: Submit ATO Form NAT 3036 to inform of the change.
Important Reminders for SMSFs with Young Members
Keep the minor’s assets and investments separate from others in the fund using distinct accounts.
Your SMSF administrator should be equipped to manage these separations cost-effectively.
If the child lacks financial literacy, a retail or industry super fund might be a better option.
Cautionary Tale:
In a known legal case, an SMSF was almost entirely drained by a member struggling with substance abuse—leaving the family with no super savings and a non-compliant fund. This highlights the potential risks of adding young or financially inexperienced members.
Supporting Documents for Adding Minor Members
At http://Trustdeed.com.au , we offer professionally drafted templates and annexures to help incorporate minor members into your SMSF smoothly. These documents are designed to meet legal obligations and streamline the process.
Our fund deeds also contain detailed clauses specifically tailored for minor members, ensuring clarity, legal compliance, and peace of mind when planning for your family’s financial future.
