The recent changes to the superannuation contribution rules have provided an important lesson for SMSF practitioners with regard to where they source compliance information from, a technical specialist has said.
According to Colonial First State head of technical services Craig Day, the method by which the non-concessional contribution (NCC) bring-forward provisions are applied to individuals aged between 67 and 75 under the Treasury Laws Amendment (Enhancing superannuation outcomes for Australians and helping Australian businesses invest) Bill 2021 is the item that has prompted this reminder.
More specifically, the explanatory memorandum (EM) included with the legislation suggested when superannuants had reached age 73 their ability to use the NCC bring-forward rules would be phased out, but the act itself dictates members can access this provision up to age 75 in an unfettered manner.
“My tip to you is, and I teach my guys in the tech team this, read the legislation. Yes it is gobbledygook, it is computer code essentially, but that tells you how the rules work,” Day told delegates at the recent SMSF Association Technical Day 2022 held on the Gold Coast.
“Then go and read the EM, or you can start off reading the EM to get an idea about what the act actually says, but then go and read the act.”
He pointed out the EM only has importance in particular circumstances.
“The EM is actually irrelevant unless what the act says is ambiguous or it makes no sense,” he said.
“So as long as the act is clear, then the EM is nothing other than an instruction manual like you get when you buy a new electronic gadget.
“Read the act, that’s what gives you the answer.”
SMSF Association deputy chief executive and director of policy and education Peter Burgess concurred with Day’s recommendation.
“If you’re trying to work out what’s changed in the law, look at the legislative changes in the law,” Burgess said.
“Don’t rely on the explanatory materials because they’re not binding and they sometimes get it wrong.”
The bill was introduced to parliament last October.
