In this guide
Five- and six-member self-managed super funds (SMSFs) have only been possible for a few years, and the take up is still relatively low, but clear investment trends are emerging in funds that have embraced the change.
This potential increase in members presents new opportunities and considerations for those thinking about setting up or expanding an SMSF.
Although the Australian Taxation Office (ATO) reports that just a small percentage of SMSF members have decided to extend their membership or start funds with larger member numbers, it can be extremely useful to those members who decide to use it.
Who’s using them?
The most recently released ATO statistics on SMSF membership numbers are based on the 2024 financial year and include membership numbers on 30 June 2024.
These statistics show that just 0.2% of the 613,872 SMSFs had five members and 0.1% had six members.
It is also interesting to note that the number of SMSFs with greater than four members has not changed significantly over the last five financial years.
| Number of members | 2023–24 | 2022–23 | 2021–22 | 2020–21 | 2019–20 |
|---|---|---|---|---|---|
| 1 | 25.3% | 24.9% | 24.6% | 24.2% | 23.8% |
| 2 | 67.9% | 67.9% | 68.1% | 68.4% | 68.7% |
| 3 | 3.3% | 3.5% | 3.5% | 3.6% | 3.6% |
| 4 | 3.1% | 3.5% | 3.6% | 3.8% | 3.8% |
| 5 | 0.2% | 0.2% | 0.1% | <0.1% | <0.1% |
| 6 | 0.1% | <0.1% | <0.1% | <0.1% | <0.1% |
| Total | 100% | 100% | 100% | 100% | 100% |
SMSF Association chief executive officer Peter Burgess says that while the number of SMSFs with more than four members is still small, it appears to be growing steadily.
“I think a major driver is the changing multicultural face of SMSFs. Advisers are increasingly relating how they are seeing a shift from the traditional one- or two-member fund, typically Anglo-Celtic with a cultural bias towards a nuclear family structure, to other groups that often exhibit two traits that make an SMSF an attractive option – small business ownership and strong intergenerational relationships,” he says.
“Many of these groups have built their wealth via a family business, so the opportunity to establish an SMSF, in which their business property can be owned, is a compelling proposition as it allows for the property to be leased back to the next generation – potentially freeing up working capital.”
Recent legislative changes providing greater flexibility around super contributions for retirees up to age 75 have also provided more opportunities for people with businesses to consider the use of vendor finance as a means of transferring these businesses to children. It has given them a larger window in which to contribute the sale proceeds into super.
What strategies arise with more members?
Potential benefits to members could include a wider range of investment strategies, as the fund has a larger pool of funds at its disposal.
A rise in the popularity of acquiring business real property through an SMSF has been suggested as one of the reasons for an increase in funds with more members, and the additional member balances those SMSFs now have available gives them extra capacity to make these large asset purchases.
Other data also backs this up. The chart below from the 2025 Class Annual Benchmark report shows that, in general, the more members an SMSF has, the lower the allocation to direct equities and the higher the allocation to direct property (note that the figures for six-member funds may be too low to be statistically significant).
Breaking this down further, we can see that SMSFs with six members have the highest allocation to Australian non-residential real property using a limited recourse borrowing arrangement (LRBA) at 28.5%, while five-member funds have the highest allocation to non-residential real property outright at 66.7%.
Chart Source: Class Annual Benchmark Report 2025
There are also cost benefits to individuals in multi-member funds. Many costs of running an SMSF, including administration, accounting and annual auditing fees, are flat dollar amounts, which means the cost per member will reduce as the number of members increases.
Also, if a family has resorted to running two SMSFs to include all members and can now convert to one SMSF, there will be potential administration cost savings.
2026 SMSF calendar
"*" indicates required fields
Disadvantages of adding members
One of the potential disadvantages of bigger funds is that there are more people involved in decision-making. This can create indecision and difficulties when members have different attitudes towards risk and differing income needs.
This adds an extra layer of complexity to the investment strategy of the fund, which now has five or six members to consider instead of a single person or a couple.
Of course, the more members in a fund, the greater the probability that one or more will go through a relationship breakdown and may have to divide their super or withdraw from the fund entirely.
In the case of a family where the children outnumber their parents, there is also the potential for elder abuse, as the younger members could outvote the parents to their potential detriment.
That’s why it’s important to review your SMSF trust deed rules around voting rights of the fund members. Is it based on member balances or is it one vote per member?
The bottom line
Even though take up so far has been low, the increase in the maximum number of members of SMSFs from four to six is providing more flexibility and investment opportunities for funds that have taken advantage of the change.
Expanding your SMSF can offer significant advantages, especially for families or business partners with aligned financial goals. However, it does also introduce an additional layer of complexity and potential risks.
You should consider the dynamics between members, the increased administrative burden and the legal requirements before proceeding. Consulting with a qualified SMSF adviser or accountant is highly recommended to ensure compliance and to structure the fund.
Leave a Reply
You must be logged in to post a comment.