The SMSF Association (SMSFA) has asked the federal government to address a number of key issues that impact the SMSF sector, but has labelled the amnesty for legacy pension conversions and the extension of the temporary absence rule as critical unresolved matters.
The SMSFA put forward its suggested list of changes as part of a submission ahead of the proposed October budget, noting its overarching themes were “simplification, review and the modernisation of the sector”.
Association chief executive John Maroney said: “We would like to highlight several key measures announced in budget 2021/22 that remain outstanding and are significant for the SMSF sector.”
Maroney said the two-year legacy pension amnesty, the removal of the active member test and the extension of the temporary absence rule for non-residents from two to five years were announced in the 2021/22 budget and were intended to apply from 1 July 2022, but were still not in place.
He added the SMSFA recognised the measures were policy proposals of the previous government, but the need for change remained.
“These measures are important reforms for the SMSF sector and we ask the government and Treasury to undertake the necessary industry consultation and progress the required legislation as a priority,” he said.
As part of the submission, the SMSFA also put forward a number of other changes directly applicable to SMSFs under the topic of red tape reduction.
These changes include adopting a single transfer balance cap (TBC) rather than the current ranges that exist from $1.6 million to $1.7 million due to indexation.
Additionally, the association proposed a reduction in the number of total super balance (TSB) thresholds from three to five by removing the $1.48 million and $1.59 million TSB bring-forward non-concessional contribution thresholds and aligning the disregarded small fund assets threshold to the general TBC.
It also repeated its call for a redrafting of the non-arm’s-length income provisions to require the commissioner of taxation to decide that those rules apply and to allow trustees to rectify transactions in certain situations.
Further, red tape reduction measures would also include removing the cancellation fee that applies to approved SMSF auditors and removing the application of the design and distribution obligations and target market determinations to SMSFs when establishing an SMSF, adding a new member or starting a pension.
