If your SMSF has more than one member, it is important to understand how the investments work. In short, all assets are owned 100% by the SMSF and are calculated percentage of each asset being ‘allocated’ to each SMSF member according to their contribution. If you have one member, that member owns 100% of the SMSF assets. If you have more than one member, members each own a portion of ALL of the SMSF assets, based on the contributions made by each member. Our BGLSF360 superstream accounting software keeps track in real time of how the SMSF funds are apportioned.
Here is an example of how it works.
Member A has $90k = 42%
Member B has $70k = 32%
Member C has $55k = 26%
SMSF Total is $215k
The SMSF buys $150k in gold and $45k in silver and $20k is left in the bank, so:
Member A has 42% of the gold and silver and cash at bank
Member B has 32% of the gold and silver and cash at bank
Member C has 26% of the gold and silver and cash at bank
You do not have separate investments. The investments all belong to the SMSF as a whole and the members are apportioned appropriately. On the other hand, things like insurance premiums and contributions are allocated to the correct member’s account. In other words, members are not receiving or paying for other members contributions or insurance. In other words, members do NOT have separate assets. This is why it is important for all Members to agree with ALL the assets purchased by the SMSF. On page 4 of the FAQs here https://freedomffs.com.au/smsf-setup/ there are other critical things to consider in an SMSF with more than one member, which Cass also explains in this video around the 12 min mark.