Insights

From the Editor

From the editor: Please leave super alone now

Welcome to the launch edition of selfmanagedsuper magazine, the industry’s premier publication dedicated to the SMSF practitioner.

The developments afflicting the trade media space over the past 12 months have meant I have not had the opportunity to write many editorials about the SMSF sector in recent times.

Sadly, though, not a lot has changed during this period, especially not in terms of government superannuation policy.

One issue that bubbled along for the better part of 2012 was the finalisation of draft tax ruling TR2011/D3, which is set to determine when a superannuation income stream commences and ceases and the subsequent tax implications of this pension treatment.

It was supposed to have been released in its final form on 25 July 2012, but this deadline came and went with a new deadline of ‘TBA’ given instead.

Again the lack of urgency with this issue and the perceived lack of understanding regarding the angst created around the tax treatment of pensions upon the death of an SMSF member are mind-boggling.

I was pleased to see the Treasurer did attempt to address this problem in his Mid-Year Economic and Fiscal Outlook (MYEFO) report when he included in it the announcement that assets being used to fund pensions will now continue to be tax free when sold to pay out a death benefit. It means SMSFs will now potentially not need to deal with disastrous capital gains tax liabilities stemming from the passing of a member who had an income stream in place.

But of course nothing is certain until the final version of the draft pension tax ruling is unveiled, and with any luck this will take a shorter amount of time than the ‘fortnight’ it took to make the announcement about the new licensing regime for SMSF accountants.

Speaking of the MYEFO report, at the time of its release Wayne Swan was still sticking to his mantra of delivering a budget surplus of $1.1 billion in the 2013 financial year, down from a $1.5-billion surplus when the original budget was handed down in May 2012.

Worryingly, in order to deliver this result the Treasurer used superannuation as a fiscal lever, as was evidenced when he increased the tax on contributions from 15 per cent to 30 per cent for individuals earning over $300,000 per year.

The most recent development just before Christmas 2012 was the Treasurer’s about face on this commitment, finally admitting a budget surplus will not be able to be achieved due to economic conditions being worse than originally anticipated.

So what will this mean for the treatment of superannuation policy? Will it mean the government will be even more desperate and dig further into the retirement savings cash cow?

Or will the admission of defeat in delivering a budget surplus see the government become more realistic in its attitude towards super and recognise it is not a fiscal tool but rather a mechanism to provide all Australians with an adequately self-funded retirement.

A further element affecting this situation will be the result of the federal election and potentially a change of government.

Regardless, the message has to be the same to both sides of the political fence: take this opportunity to allow the super system to achieve its main purpose and, in particular, please leave it alone.

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