Financial advisers currently should not be implementing strategies based on proposed legislation for an increase in the maximum number of members allowed in an SMSF, a sector technical expert has warned.
The federal government announced in April last year its proposal to increase the maximum number of members allowed in an SMSF from four to six, 20 years after the four-member SMSF rule was introduced.
But SuperConcepts technical services and education general manager Peter Burgess told selfmanagedsuper no draft legislation has been released and nothing has yet been introduced into Parliament, meaning the government is running out of time to legislate the proposal given the looming federal election this year.
“The fact we haven’t seen any consultation paper or draft legislation issued on the six-member fund measure suggests Treasury has not put this in the consultation required bucket; that they’re just going to go straight to the bill,” Burgess said.
“But even if they do that, they have to get it passed before the election is called.”
He also said it is unclear whether the Labor Party and minor parties will support the proposal, adding the ALP is unlikely to implement the policy should it win power.
“It’s looking unlikely that that will pass before the election is called, so again the likelihood of the number of SMSF members being increased to six now seems to be dependent on whether the coalition is re-elected,” he said.
In addition, he noted the bill relating to non-arm’s-length income (NALI) in the Superannuation Taxation Integrity Measures has stalled because Labor does not support the proposed changes to the superannuation guarantee amnesty rules.
The integrity measures consultation paper released in January 2018 stated the government is seeking to include expenses incurred in a commercial related-party transaction, meaning these arrangements with higher net income will not receive concessional tax treatment.
The ATO issued a practice guide on the proposed changes at the end of last year, which Burgess said reassured the industry the proposed changes will not be as dire as first expected.
“They’re not interested in invoking the new NALI rules where trustees provide services to their own fund in the capacity of trustee,” he said.
“Where they will invoke the new rules is where trustees outsource those services to a third party which is not a non-arm’s-length arrangement.”