The new Tony Abbot led Government advised that soon after they were elected they were informed that ninety-six superannuation and tax announcements had not been legislated in the last 12 years.

Joe puts the broom to work

Four of these previously proposed measures have been dealt with as part of the repeal of the Carbon Tax and Mining Tax package.  The remaining ninety-two measures of unlegislated tax and superannuation measures have been classified into three groups:

•   Proceeding
•   Not proceeding
•   Further consultation required.

Joe Hockey advised they are determined to resolve all policies relating to these matters by 1 December 2013 for inclusion in the Mid-Year Economic and Fiscal Outlook (MYEFO) and intend that the bulk of legislation that is to be progressed should be passed by the Parliament by 1 July 2014. Here we look at the Superannuation related measures that may affect SMSF Trustees and members.

Superannuation proposals that have got the green light

Transfer of lost member accounts to the Australian Taxation Office (ATO) 

The Government will proceed with increasing the threshold whereby lost accounts are required to be transferred to the ATO from $2,000 to $4,000, and then to $6,000. This is estimated to add more than $815 million to consolidated revenue.

Superannuation proposals that are getting the flick – red light

Tax on superannuation pensions 

The Government will not proceed with Labor’s announcement of 5 April 2013 which would have taxed people’s superannuation pension earnings above $100,000 in the income stream phase. The Government acknowledged that complexity and compliance costs associated with this initiative are extreme and essentially undeliverable. Thank you to SPAA, FPA, ICAA, IPA, CPA and AFA for putting forward such great arguments to dissuade this poorly thought out initiative.

It is estimated that not proceeding with this measure will negatively impact the underlying cash balance by $313 million over the current forward estimates period.

This move will be welcomed by all in the superannuation industry and I do not believe the ordinary member of the public realised how much havoc managing such a proposal would have had caused and the administrative cost would have to be borne by all superannuation members

Establishment of a council of superannuation guardians

The Government will not proceed with the creation of the council of superannuation guardians or the Charter of Superannuation Adequacy and Sustainability. It is estimated that this will save $7.5 million over the current forward estimates period.

This I am disappointed with as a glance at the poorly thought-out tax on pension above would indicate that had the previous government taken time to consult with industry they would have been alerted to the folly of this measure early on and avoided the damage done to the reputation and stability of the superannuation system.

Superannuation proposals that are to be reviewed – Amber light

Clarifying the operation of certain superannuation trust deed clauses 

This measure is designed to ensure that trust deed clauses cannot be used to prevent excess contribution amounts from being counted as contributions.

Acquisition and disposal of certain assets between related parties of self-managed superannuation funds (SMSFs)

The May 2011 Budget contained an announcement that there would be restrictive rules for the acquisition and disposal of certain assets between SMSFs and related parties. Although legislation was drafted, it was excised from the relevant Bill, meaning that there were no changes made to the related party acquisition and disposal rules. Hopefully the Government will confirm that other changes to law, including the requirement for all SMSF transactions to be conducted at market value, providing there is sufficient comfort that no manipulation of prices will result in favourable capital gains tax and contribution cap outcomes.

Encouraging the take-up of deferred lifetime annuities

This measure is designed to encourage the take-up of deferred lifetime annuities (DLAs) by providing these products with the same concessional tax treatment that applies to investment earnings on superannuation assets supporting retirement income streams.

Verification of SMSF members and bank accounts

The Cooper review recommended changes to ensure that superannuation money is transferred to a valid SMSF bank account. The recommendation included that a register is provided to enable APRA funds to check SMSF details to meet data and e-commerce standards. This proposal appears quite valid given that often bank officers opening the relevant accounts do not understand the significance of the difference between a personal tax file number (TFN) and an SMSF TFN and ABN. This can often result in personal accounts being opened instead of SMSF accounts to get better rates or lower fees. It is not until the auditor of the fund comes along that often the mistake is recognised. Worse still, the ATO includes fund income in a personal tax return rather than an SMSF return.

Stronger Super measures

Unlawful payments from regulated superannuation funds — promotion of illegal early release schemes
This measure introduces penalties for promoting schemes designed to obtain the illegal release of superannuation benefits.

Unlawful payments from regulated superannuation funds — income tax rates amendment
Superannuation benefits received illegally will be taxed at 45 per cent plus Medicare levy.

Rollovers to SMSFs
Rollovers to SMSFs will become a ‘designated service’ under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF). Superannuation funds will be required to introduce additional checks and safeguards.

SMSF administrative directions and penalties
This measure gives the ATO flexible and cost-effective penalty options to deal with SMSFs that breach the law. This was a surprise exclusion from legislation passed prior to the election, given it appeared to have bi-partisan support, together with broad support from industry.

A big thank you to the IOOF Technical team for the background detail on these measures and content.

As always if you have any comments please add them below or if you wish to discuss your position and strategies for Centrelink and/or Aged Care costs then please contact us for an appointment at our Castle Hill or Windsor office or call me direct on my mobile 0413 936 299.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

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