While it remains unknown how many superannuation measures, if any, will be announced in this year’s federal budget next week, a significant number of calls for more reform to the system have been made in industry stakeholder submissions, several of which have been SMSF specific.
To this end, it has been recommended by bodies such as the SMSF Association that SMSF auditor cancellation fees be scrapped as continuing to require exiting practitioners to fulfil this financial imposition serves as a barrier to the more efficient operation of the sector.
Calls have also been made to exempt SMSFs from some of the new product design and distribution obligations for product providers and advisers contained in Australian Securities and Investments Commission Regulatory Guide 274. In particular, a number of budget submissions have suggested for the new requirements not to apply to the establishment of an SMSF, the admission of a new member to one of these funds or when an individual commences an SMSF pension.
The non-arm’s-length income rules are another issue some quarters of the industry are asking to be addressed, not so much the provisions themselves, but the interpretation of these laws.
“[It is thought] the interpretation in the ATO rulings could lead to unintended consequences that have unwarranted and long-term impacts on fund members with the imposition of punitive rates of tax being imposed on the fund,” SuperConcepts SMSF technical and private wealth executive manager Graeme Colley said.
Recommendations have also been made to amend the severity of some of the non-geared unit trust rules applying to SMSFs. Specifically, these calls are looking to address the legislative restrictions that dictate a minor breach of the rules means the trust’s assets will subsequently be treated as in-house assets for the relevant SMSF.
“It is submitted that the legislation be amended to provide some flexibility to accommodate minor breaches of the legislation,” Colley noted.
Other calls have been made for the budget to reduce the number of governing thresholds with regard to the total super balance and the transfer balance cap to reduce the administrative burden borne by the industry and to review the laws governing binding death benefit nominations to better guard against elder abuse.
