Legislation, Superannuation, Tax

Simpler Div 296 calculation possible

Division 296 calculation method SMSF Retail superannuation Industry superannuation MLC Julie Steed

The supposed administrative impost that led to the government’s Division 296 calculation method could have been avoided using direct reporting for the non-SMSF members affected.

Complaints by retail and industry superannuation funds that the actual earnings of members would be too difficult to report for calculating the proposed Division 296 tax could be addressed by only supplying that information for those above the $3 million threshold each year.

MLC senior technical services manager Julie Steed said the proposed Division 296 calculation method was based on easing the administrative burden for retail and industry superannuation funds, but the number of their members affected would only be around 20,000 and their earnings data could be provided directly to the ATO.

“Treasury have released figures that they believe that less than half a per cent of superannuation fund members will be impacted [by Division 296] and that equates to about 80,000 individuals,” Steed said in an online briefing for advisers today.

“Of those 80,000 individuals, it’s estimated that approximately 60,000 of them are in self-managed super funds and that only 20,000 individuals are members of retail or industry funds or corporate and government funds.”

She noted the 60,000 SMSFs would be able to report earnings or losses on a member-by-member basis within the fund’s annual return, but there were two main objections from some industry and retail funds to doing the same.

“One of the objections of the funds about reporting an individual’s allocated earnings is that it would be a huge impost to make a change in reporting just for this one issue,” she said.

“A really simple solution that has been offered to the ATO is that if we are going to have across the whole rest of the industry 20,000 impacted members, it tells funds which members they want that information for and the funds send a CSV file or do something through the business-to-business reporting system.”

She added fund trustees were also aware of changes in earnings and their internal calculations could be used to report them.

“We [MLC] have figured out in our retail funds ways we think we could do it fairly because retail funds spend inordinate amounts of time, effort and money striking unit prices. It’s something the trustees take so seriously,” she said.

“From this there is an argument that using the amount that is allocated to a member, via a differential in a unit price from the beginning of the year to the end of the year, is not that different to what is being proposed.”

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital