Government warned to back off on proposed changes to SMSFs

Self-managed superannuation funds have called on the Federal Government to stop tinkering with the superannuation system.

The government has abandoned plans for substantial changes to superannuation in the mid-year federal budget review, according to The Australian Financial Review.

However, yesterday Finance Minister Penny Wong avoided questions in the Senate as to whether the planned changes had been dumped.

“Those of us on this side are part of the movement which built superannuation in this country,” Wong said.

Graeme Colley, director of education and professional standards at the SMSF Professionals Association of Australia, spoke to SmartCompany this morning from Canberra where he is meeting with Treasury officials to discuss SMSF reform.

Colley says the SPAA is concerned about reforms to the regulations governing SMSFs, as both the Australian Taxation Office review and the government’s own Cooper review into superannuation in 2010 concluded that self-managed funds are being well run.

“The investments by SMSFs are no different to large superannuation funds as they invest directly in the market,” he says.

Colley says the SPAA has flagged reports the government is considering additional taxation on superannuation when it moves from the accumulation phase to pensions phase.

“We don’t know what the detail is on that yet and the government does not seem to be looking at it as part of the mid-year economic review but may look at it in the context of next year’s budget,” he says.

“There were reports that any capital gains on geared property owned by self-managed funds could be made subject to capital gains tax. 

“The gearing arrangements people have gone into are relatively new, as the provisions allowing this are new so we wouldn’t think there will be much revenue opportunity there.”

Colley says the uncertainty surrounding possible changes is detrimental for the SMSF sector.

“It’s putting people off superannuation and our main concern with superannuation is that you really have to pay attention to the long-term adequacy of superannuation,” he says.

“The question is will we have enough for retirement and, at the moment, most Australians don’t.”

The SPAA will also raise concerns with Treasury about the government’s introduction of a limited licence for accountants.

“Our concern is that it may not be people who are qualified in self-managed super funds who are able to give that advice,” Colley says.

“A practicing certificate does not necessarily give the competency to advise on a SMSF.

“We propose that the advisers have high levels of competency to provide advice on SMSFs from a technical point of view and a strategic financial planning point of view.”

Keep up to date on tax and super matters relating to SMSFs and SMEs by reading SmartCompany’s regular contributors Terry Hayes and Michael Laurence.