Legislation, Superannuation, Tax

Short consultation period a risk

Superannuation earnings tax consultation period

The industry requires a longer consultation period to evaluate the impacts of draft legislation imposing measures like the $3 million soft cap.

The federal government has not provided an adequate timeframe for industry to submit responses to draft legislation aimed at introducing an additional earnings tax for total superannuation balances (TSB) over $3 million which could result in the implementation of flawed policy, according to a SMSF legal expert.

DBA Lawyers principal Dan Butler raised concerns regarding the complexity of the draft bills released last week, stating the brief consultation period of just over two weeks does not allow the government and superannuation sector to fully consider the comprehensive impacts of proceeding with the measure.

“This new legislation [is] very complex material, and the professional bodies get just over two weeks to deal with it. Now in two weeks, it’s very hard to get a group together, let alone staff for the drafting of a submission,” Butler told attendees at a DBA Lawyers SMSF update webinar held last Friday.

“So you can see this process of consultation is no real process of consultation, when you only get given two weeks on a very complex new law with very widespread ramifications and the superannuation industry is a major industry in itself.

“It would be very nice if government [and] Treasury listened to the professions. It’s amazing how many times we see it, in that there is the prospect for something simple, but whatever it is, it comes out as complex as you wouldn’t believe,” he said.

“A lot of the submissions [are] water off a ducks back.”

Butler pointed out the absence of a sufficient consultation period may result in design flaws with the tax, citing the revenue calculation method as an example, and suggested more time is needed to consider how the legislation, if enacted, might be applied in practice.

“The industry is accepting of the tax, it however has a real problem with the complexity of the tax, particularly the SMSF Association. They’ve been very vocal to say SMSFs can quite readily present the taxable income per member and there’s no need to go on this very complicated procedure with the TSB,” he noted.

“We’ve had a whole team of lawyers going through this material over the last couple of days and it’s really turgid, really complex stuff and we have difficulty today getting straight answers from the ATO.

“So when you put this real complex system in place and then have to follow-up with the ATO, there’s going to be errors [and] there are going to be problems.”

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