While the federal budget handed down by the new Labor government confirmed the change to the residency rules regarding SMSF trustees is still on the superannuation policy agenda, the sector still does not know the details as to how the measure will work.
The original measure announced by the Morrison government in the 2021 budget increased the central control and management test safe harbour from two to five years and scrapped the active member test.
However, BT Financial Group head of financial advocacy and literacy Bryan Ashenden revealed the industry is unaware of exactly how this timeframe will be applied.
During the latest episode of the BT Academy Technical Webinar series, Ashenden fielded a question from an attendee as to whether time spent overseas by a trustee currently would be included in the new safe harbour provisions should they be implemented on 1 July 2023 or if the amended measure would only apply to trustees who had travelled overseas after the commencement of the new financial year.
“[The question is if the trustee] had already been overseas for 18 months would they get another three-and-a-half years [under the amended safe harbour] to take them up to the five years or [would] they have to come back to [Australia to] reset to start?” he said.
“It’s an interesting question. We don’t know really I guess until we see the actual legislation.
“I suspect that it might become a mid-transition where [the safe harbour] automatically becomes five years.”
Like other SMSF stakeholders, he suggested the budget was more notable for the lack of announcements regarding superannuation.
“Largely, other than repeating a couple of minor measures that had already been announced pre-election, there were no superannuation changes,” he said.
“You may recall there had been some speculation over recent weeks about whether there may be some form of cap introduced [regarding] the amount of money you can have inside the super environment. There had been talk about a $5 million figure, as an example, but there was no announcement in that space.”