In its pre-budget submission, the SMSF Association has highlighted a range of different measures that were previously announced in the federal budget for 2021–22 that remain outstanding.
SMSF Association chief executive John Maroney said some of these measures include the two-year amnesty for legacy pensions conversions and the removal of the active member test and the extension of the temporary absence rule for non-residents from two to five years.
“These measures are important reforms for the SMSF sector, and we ask the government and Treasury to undertake the necessary industry consultation and progress the required legislation as a priority,” said Mr Maroney.
The overarching themes of the submission, he said, is simplification, review and the modernisation of the sector.
One of the other proposals made in the submission is to simplify the transfer balance caps by moving to a single cap for all superannuation members.
The SMSF Association noted that when the general transfer balance cap indexed on 1 July 2021, it added more complexity.
“The system has shifted from having a single cap to individual caps ranging from $1.6 to $1.7 million, causing confusion and increased costs. A single cap will benefit all stakeholders,” the submission explained.
The submission also proposes reducing the number of total superannuation balance thresholds.
“The introduction of multiple TSB thresholds is unnecessarily adding to the complexity of the superannuation system. This has made it increasingly difficult for individuals to understand the superannuation system and their options,” it explained.
“In addition to the number of thresholds, confusion, complexity and added costs arise because some of these thresholds are indexed and some are not, and those that are indexed are subject to different methods of indexation.”
Another priority, the submission stated is rewording or modifying the non-arm’s length income provisions with new principles.
“The introduction of the non-arm’s length expenditure (NALE) rules from 1 July 2018 will have far-reaching and unjustifiable consequences for superannuation,” the association explained.
“The rules should be re-worded or re-drafted to require the Commissioner of Taxation to decide that the section applies and to allow trustees to rectify transactions in certain situations.”
