Proposed changes to the process of registering a fund have raised concerns for the SMSF Association, which has questioned whether shifting oversight powers from superannuation law to regulations will grant extra powers to the ATO.
The federal government announced a series of changes as part of a new consultation, Miscellaneous Amendments to Treasury Portfolio Laws 2024, which includes changes to section 254 of the Superannuation Industry (Supervision) (SIS) Act, specifically focused on the information trustees must submit to the ATO when establishing an SMSF.
The explanatory materials to the draft bill released by the government state the amendments will clarify that under the SIS Act, SMSF trustees will be required to give all registration information to the ATO and offer any further information to the regulator when requested.
“Prior to the amendments, subsection 254(1) of the SIS Act required the trustee of a superannuation entity to give the Australian Prudential Regulation Authority (APRA) (or another body specified in the regulations) such information as is required by an approved form,” the materials stated.
“However, the commissioner of taxation is the relevant regulator for this requirement. The amendments replace the references to APRA with references to the commissioner of taxation.”
The materials added that where information is required from a trustee, it must be provided “in the approved form if there is such a form”, but where that form does not exist the provision of the information will be covered by superannuation regulations.
“The delegation of this power to the regulations is reasonable, necessary and proportionate because it provides certainty to trustees who are required to provide information. It provides an alternative method of prescribing, by regulations, of how information must be presented in circumstances where an approved form is not made,’ the materials said.
However, SMSF Association head of technical Mary Simmons said the changes “while seemingly minor, could signify a significant shift in the regulatory framework governing SMSFs and the role of the ATO”.
Simmons noted the shift from APRA to the tax commissioner could lead to more direct oversight by the ATO.
“Is this perhaps indicative of a gradual move towards a more prudential regulation model, traditionally not within the ATO’s remit?” she said.
“What’s equally concerning is that the changes will allow for more rapid regulatory changes. By delegating certain powers to the SIS Regulations, the government will clearly have the ability to adapt to changing industry practices more swiftly.
“Perhaps this is a step towards giving the ATO more power to mandate trustee education before establishing an SMSF? Perhaps this is a step towards giving the ATO more power to monitor new SMSFs in an effort to curb illegal access to superannuation benefits?
“On one hand, there’s a need to safeguard the integrity of SMSFs, ensuring a compliant framework is in place that can adapt to evolving industry practices.
“On the other, it’s crucial to avoid over-regulation, increased red tape and administrative complexity that disadvantages those who genuinely choose to establish an SMSF for retirement purposes.”
