The federal government’s decision to scrap the proposed system that would allow Australian Prudential Regulation Authority (APRA)-regulated super funds to verify the existence of SMSF bank accounts could have adverse consequences, according to an industry expert.
“This is a problem for the self-managed super fund sector. Why? Because until such time that APRA [-regulated] funds have the facility to verify the existence of a self-managed super fund bank account, self-managed super funds will remain excluded from the SuperStream world of fund rollovers,” AMP SMSF head of policy and technical Peter Burgess said.
“It means the process of rolling money into self-managed super funds will continue to remain time consuming and ineffective.
“So we want a facility where APRA [-regulated] super funds can verify the existence of these bank accounts. That will bring self-managed super funds into the SuperStream world, which we know is a very efficient process.”
Burgess also warned the use of excess contributions provisions to avoid excess contributions tax was unwise even though the move to ban the use of them had been revoked.
“So are we at the point where these clauses provide a solution to excess contributions tax? Well I don’t think so,” he said.
“Even though the taxpayer alert [on the practice] has been withdrawn, the ATO (Australian Taxation Office) still has some very strong views about these clauses.”
The ATO had made it clear on its website that reliance on those clauses would more than likely bring about a compliance breach of some kind, he said.
“So it’s not a good idea, given the ATO has such a public view on this, for you to be relying on these clauses,” he said.
However, he said he believed the withdrawal of the taxpayer alert dealing with the strategy meant regulators had missed an opportunity to provide greater clarity around those measures.
