No SMSF can escape being affected by the Productivity Commission’s draft report into competition and efficiency in superannuation and its findings about the SMSF sector, according to Chartered Accountants Australia and New Zealand (CAANZ).
CAANZ superannuation leader Tony Negline told a recent FIIG Securities webinar on superannuation in 2019 that while the industry will have to wait and see what recommendations the federal government will ultimately consider and accept or reject, the impact will be significant.
“I think there will be no fund that is not impacted by the Productivity Commission. How? I can’t say because it’s a bit too early, but there will be no fund ultimately that is not impacted by the Productivity Commission’s findings in one form or fashion,” Negline said.
“There will be flow-on impacts for a number of years, I think.”
He agreed with the likes of SMSF administrator Class, which lodged a submission on the Productivity Commission’s report, stating there is doubt about whether the commission examined the right data set to make its assessments.
“They relied on ATO data and I think the ATO data includes some expenses and some items that are not included in APRA (Australian Prudential Regulation Authority) data when they work out annual returns, and they were comparing like for like at that particular point in time. So I’m not convinced they were comparing like for like,” he said.
He also noted there might be a cohort of people who run a fund with a very small account balance as it suits their personal circumstances.
“They might own a particular type of asset in the fund they want in there. They might be a day trader and think, ‘okay, well I’ll hide all or part of my retirement money into a special little fund and I’ll muck around with that. You know, it’ll be like my playground from an investment perspective’,” he said.
Others might establish a fund with an initial small balance and grow that over a period of time, but they will be forbidden from running a fund if the Productivity Commission’s draft recommendations are implemented, he said.
“I remember we started our fund with $1000 and then we transferred money in from our other fund, so prima facie then does that mean under those rules I couldn’t start my fund because I didn’t have the money available at that point in time?” he said.
He said he would be surprised if the rule requiring a minimum of $1 million to be eligible to establish an SMSF is implemented.
“Far be it for me to say what will or won’t, but I’d be surprised,” he said.