Regulation Round ups

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Regulation round up: Quarter II, 2019

Quicker approval of complying status

New SMSFs no longer need to wait until after the first annual return is lodged to receive complying status.

Since March, several days after registration new SMSFs have been listed on Super Fund Lookup as ‘Registered – status not determined’ before being updated to ‘complying’ a few days later.

Indexation of super thresholds

www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/

The ATO has released the key indexed thresholds for 2019/20.

No changes will be made to the caps for concessional or non-concessional contributions, and the general transfer balance cap remains at $1.6 million.

Members stay at four

Treasury Laws Amendment (2019 Measures No 1) Bill 2019

With the rush to pass legislation before the federal election was called, the measure included in Treasury Laws Amendment (2019 Measures No 1) Bill 2019 to increase the maximum number of SMSF members from four to six was removed.

If the coalition is re-elected, the change may make its way back into a new bill as the Senate Economics Legislation Committee recommended it be passed.

Super statistics

APRA’s “Quarterly Superannuation Performance” report – December 2018

The latest Australian Prudential Regulation Authority “Quarterly Superannuation Performance” report released in February showed total superannuation savings continue to grow, with a 1.3 per cent increase over the 12 months to December 2018.

This brings the total in all superannuation funds to $2653.2 billion.

However, over the year the balance of SMSFs reduced by 0.2 per cent. The reduction over the December quarter was 3.1 per cent.

Protecting low balances

Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2019

Changes aimed at protecting the erosion of low-balance accounts have been passed. Some amendments were made to proposals in the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2019 during its progress through parliament.

From 1 July, fees on funds with balances less than $6000 will be capped at 3 per cent and exit fees will be banned.

Inactive accounts with balances less than $6000 will be transferred to the ATO. Measures to require members under 25 and with low balances to opt in to default insurance cover were removed from the bill, but accounts that are inactive for 16 months may have insurance cover cancelled unless the member opts in to continue any cover.

Work test exemption for recent retirees

Treasury Laws Amendment (Work Test Exemption) Regulations 2018

The Treasury Laws Amendment (Work Test Exemption) Regulations 2018 were finalised to allow a one-year exemption from the work test rules for a person between the ages of 65 and 75 with a total superannuation balance below $300,000.

This allows an extension of time to organise finances to contribute to superannuation. SMSF trustees may wish to review the trust deed to ensure this measure can be used.

TRIS and beneficiaries

Treasury Laws Amendment (2018 Measures No 4) Bill 2018

The Treasury Laws Amendment (2018 Measures No 4) Bill 2018 has been passed to fix an issue with reversionary transition-to-retirement income streams (TRIS).

The fix ensures a reversionary TRIS can be paid to a reversionary beneficiary even if that person has not met a condition of release.

Without this change, to pay a pension to the beneficiary the TRIS would have needed to be commuted and then a new pension started. This was a technical error and has been rectified.

Auditor listings

Auditors can make a request to the ATO to receive a list of SMSFs that have reported them as the auditor in the annual return.

This allows auditors to check the validity of all claims to ensure SMSF trustees are not misusing an auditor’s details.

The ATO is providing all SMSF auditors with a list of funds that reported them as their auditor for the 2017 income year. The list was due to be emailed to auditors between March and May.

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