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Regulation, Superannuation

COVID-19 knocks super reforms off track

covid-19 superannuation reforms

A newly revised parliamentary timetable will add further delays to superannuation reform measures announced in the 2019 federal budget.

The revised parliamentary timetable recently announced by the federal government as a result of COVID-19 isolation policies has raised concerns about its impact on a raft of superannuation reforms that had yet to be passed by the government.

The concerns were raised by Chartered Accountants Australia and New Zealand (CAANZ) superannuation leader Tony Negline in an update on the CAANZ website.

“Parliament will not sit again until 11 August. This means many super policy measures that were due to commence on 1 July 2020 or later will not be legislated in time,” he said

Negline pointed out superannuation measures, such as allowing personal contributions without a work test until under age 67 and increasing SMSF maximum numbers from four to six, that were announced in the 2019 federal budget were likely to be delayed.

He also noted the revised parliamentary timetable would affect the government’s move to permit more super funds to prepare their accounts using the proportional method, reduce how many funds require an actuarial certificate for tax-exempt pension income and allow a three-year audit cycle for SMSFs, all of which were included in last year’s budget announcement.

In addition, Negline highlighted potential issues relating to in-house assets (IHA) and total super balance (TSB) and transfer balance account (TBA) valuations based on 30 June 2019 valuations that would need to be addressed from a superannuation law perspective as a result of the economic impact of COVID-19.

“There will be many SMSFs with IHAs that now have at least two problems – reduction in rent to a related party and a reduction in market value of all assets, meaning the IHA asset restrictions are breached,” he said.

“As asset prices have fallen sharply, it does not seem appropriate that some people will remain locked out of the ability to make super contributions because their TSB, based on market valuations from 30 June 2019, was above $1.6 million.

“A similar problem arises for those with money in pensions assessed for TBA purposes based on much higher valuations.”

It also pointed out non-arm’s-length income measures within super funds were also likely to be affected.

“These have a commencement date of 1 July 2018, were not legislated until 2020 and the ATO is still to finalise its legislative interpretation. This policy should be delayed until 1 July 2021 at the earliest,” he said.

Yesterday, the SMSF Association said it was continuing to lobby the government and work with the ATO on the implementation of further financial relief measures for the sector in the wake of the coronavirus pandemic.

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