Trustees have regarded the federal government’s move to allow an increase to a maximum of six members in an SMSF, up from the current number of four, almost purely as a countermeasure to Labor’s proposed change to the franking credits refund rules, according to an SMSF administration service provider.
Speaking at the Self-managed Independent Superannuation Funds Association 2019 SMSF Forum in Melbourne last week, SuperConcepts SMSF technical support executive manager Nicholas Ali said: “We’re the tax agent for [around] 25,000 and we only had an uptick on this when clients thought excess franking credits were not going to be refunded to a fund.
“So they were potentially looking at bringing in members in accumulation phase so those members could use up the excess franking credits before they were then potentially lost.
“When the Labor Party was not elected, or should I say when the coalition was re-elected, we’ve had very, very little interest in this.”
Despite this observation, Ali acknowledged the measure remains as government policy, but given his organisation’s experience he is unsure how popular it will eventually be among SMSF trustees.
He also revealed another proposed pre-election coalition policy had to date also not received much support from SuperConcepts’ clients.
“The other thing that we’ve had very, very little interest in is the three-year audit cycle,” he said.
“[It’s] problematic on a number of levels. The logic is that it will make fund administration more streamlined, but I’m not sure that it will.
“It [supposedly] will make audits cheaper, but I’m not sure that it will. It’s probably built in potentially a level of risk into SMSFs in that every three years an audit is going to potentially catch something that’s been festering for a period of time.”
Late last year, a survey found the majority of SMSF practitioners did not support the introduction of a three-year audit cycle.
