The 2018 federal budget measure allowing individuals earning in excess of $263,157 a year from multiple employers to nominate a single employer from where super guarantee (SG) contributions will be made has been described by an industry technical expert as a common-sense move that should have been implemented years earlier.
Given that SG was always an opt-out opportunity when we had reasonable benefit limits, I always felt there was inequality in having an inability to opt out of SG for contributions cap purposes,” Miller Super Solutions founder Tim Miller told selfmanagedsuper.
“So you’re effectively forced into an excess contributions situation through no choice of your own.
“The way I interpret it this will overcome that issue, so I think it’s a great measure particularly with those people with multiple employers to at least not be forced into the excess situation without choice and they’ll be able to have contributions just going up to the cap.”
IOOF senior technical services manager Julie Steed said the measure will definitely benefit some specific groups of individuals.
“We see doctors all the time who receive $200,000 from this hospital and $200,000 from that hospital as well, so for them it will work,” Steed told selfmanagedsuper.
She also recognised a positive administrative outcome for SMSFs.
“They don’t actually care about paying the extra tax, and the interest penalty, it’s more about the hassle of getting the determination and going through and making the releases or not making the releases and them remembering that there is a knock-on effect on non-concessional contributions.
“So it will be a bonus from an administrative perspective.”
With regard to the scrapping of exit fees on superannuation benefit rollovers, she was cautious as to the detail the final measure will incorporate.
“I think it will be very interesting to see how exit fees are defined. Obviously in an SMSF you’re not going to be charged a fee for processing the paperwork, but you will if you use administration services that charge a fund for doing that and also if you need to receive advice around the rollover,” she noted.
“Presumably these will be fees that clients will have engaged with the SMSF service provider on, but it’s not particularly clear I don’t think as to what the definition of an exit fee will be.
“Looking at that, lots of things are called exit fees, so knowing what will actually be the definition of an exit fee will be interesting.”
According to Miller, the measure will be positive if it results in greater efficiency.
“It would be nice to see that the removal of exit fees results in expedition of the rollover process because I think that’s always been the greater issue for SMSFs,” he said.
“While there is an expectation of a turnaround time for rollovers, it’s more been the slowdown process based on the complying fund status and those sorts of issues.”