LRBA, Superannuation, Tax

Election puts SMSF measures back on govt agenda

Green tick in box labelled yes

The coalition’s election win is likely to result in a number of stalled SMSF measures being reintroduced into parliament.

The re-elected coalition government has been called on to maintain stability within the superannuation sector, but is likely to reintroduce a number of measures that were halted by the calling of the election.

SMSF Association chief executive John Maroney said following the legislative changes that took effect from 1 July 2017, it was essential superannuation fund members had a period of sustained stability.

“For self-managed super fund members, policy continuity means they can focus on managing their financial needs rather than being constantly forced to consider significant changes to their retirement plans,” Maroney said, adding trustees would be relieved the ban on franking credit refunds was no longer a threat to retirement plans.

He added the association would continue to call on all political parties to legislate the objective of superannuation, as well as its application and purpose, and that any future changes be assessed through those objectives.

“Considering the recent policy landscape, including the financial services royal commission and Productivity Commission, ensuring that superannuation has a clear objective will help drive meaningful and effective policy change,” he said.

“Building a successful retirement income and superannuation system requires public confidence in the efficiency and fairness of the system and, going forward, we look forward to working with all sides of politics to continue improving the super system, particularly regarding the simplicity of superannuation legislation, so that all retirees can seek to achieve a secure and dignified retirement.”

SuperConcepts technical services general manager Peter Burgess said the election result provided some certainty around superannuation policy and a number of measures introduced in the last parliament are likely to be reintroduced from next month onwards.

Burgess said along with the ban on franking credits, Labor’s plans to reduce contribution caps were also no longer up for discussion, but measures introduced in this year’s budget to encourage older Australians to contribute to super, as well as those from previous budgets that had not been passed by parliament, were back “on the table”.

“This includes the new super guarantee opt-out rules for high-income-earning individuals with multiple employers; changes to the definition of non-arm’s-length income (NALI) to capture income derived from an investment as NALI if the fund has not incurred an arm’s-length expense in relation to that income; and changes to the calculation of a member’s TSB (total superannuation balance) if they enter into a LRBA (limited recourse borrowing arrangement) and whether they have satisfied a CoR (condition of release) or the loan is a related-party loan,” he said.

“With a possible outright majority in the lower house and a slightly less hostile Senate, we may even see the re-emergence of the government’s proposal to increase the maximum number of SMSF members from four to six.”

I Love SMSF chief executive Grant Abbott said the election outcome “was a great result … and we can all breathe a sigh of relief that Labor and the industry super funds did not take control”.

“Chris Bowen, the Labor Party treasurer, told a group of elderly voters that if you don’t like our policies, that is, refundable franking credits, then don’t vote for us – and self-funded retirees and aspiring self-funded retirees have moved in droves,” Abbott said.

“Refundable franking credits remain, but the cost of imputation, given the large amount of pension funds, retail, industry and SMSFs, will mean change in the future, but across the board.”

He also said that, as a result of the election, he expected LRBAs to grow again in popularity, including related-party LRBAs, and that six-member SMSFs were very likely to be introduced.

Abbott pointed out that despite the coalition being returned, the focus on the superannuation sector would remain.

“We have another three years to take full advantage of six-member funds and super streaming of rollover monies from industry and retail funds to family SMSFs,” he said.

“But with $3 trillion in super, expect huge budgetary attacks on super, despite the promises. It’s either now or in the very near future. We have to build, grow and protect our clients’ SMSF positions now.”

Wilson Asset Management chair and chief investment officer Geoff Wilson thanked the company’s shareholders for their efforts in opposing the franking credit changes, saying: “Together, we have put a stop to the inequitable and illogical proposal to remove franking credit refunds.

“On Saturday, Australians delivered a strong message to all politicians that the current dividend imputation system should be protected.

“We have greatly appreciated your support during our 14-month campaign. The thousands of stories we have heard deeply moved us and we are incredibly honoured if we have made a difference for you.”

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