Collaboration key to navigating super changes

Fostering greater collaboration between the ATO and industry bodies, such as the SMSF Association, to help navigate the incoming super measures is essential to building fund members’ trust in the system and ensuring the changes are successfully implemented.

That is the view of ATO deputy commissioner of superannuation James O’Halloran.

O’Halloran told the SMSF Association 2017 National Conference in Melbourne last week that industry dialogue was already underway to provide certainty and advice in relation to the superannuation changes and their impact on the sector.

“We are in the year of the new super measures [and] that gives us both challenges and opportunities to work through,” he said.

“Ongoing dialogue and certainty is essential … it is important that the ATO come forward in the coming months to work with you [the industry] and the SMSF Association to [address] the new measures.”

One specific area of interest to the ATO under the incoming legislation was navigating the impact on a member’s total super balance – defined as the sum of the accumulation and retirement-phase interests across all a member’s super funds and life insurance companies, he said.

The ATO would look at that from the perspective of the effects of non-concessional contributions and members accessing the bring-forward option, in addition to the way in which an SMSF’s exempt current pension income was calculated, he noted.

Another area of interest for the ATO would be the application of the $1.6 million transfer balance cap, which could be a real challenge given it was a “point-in-time” calculation of the assets supporting an income stream paid to a member, for which the SMSF claims a tax exemption, he said.

Both the transfer balance cap and the total super balance would require new reporting measures, incorporating details of the member and the retirement-phase income stream, as well as their total balance of retirement-phase holdings and associated pension types, he said.

He noted there would be an increasing need for “event-based reporting” and the responsibility was on fund members to be aware of their pension’s value to understand the transfer balance cap and its consequences.

“We’ve undertaken significant work since November last year to provide some early advice around our [draft] companion guidelines to outline the commission’s view on some of the key concepts and … how the ATO will apply the new measures and laws,” he said.

“All superannuation partners, including the SMSF Association, will have a pivotal role … and together we can build upon past collaboration and successes.”

Last week, the ATO and SMSF Association announced they had partnered in a three-year deal aimed at improving the integrity and professionalism of the SMSF sector, as well as influencing appropriate behavior in the industry.

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