Treasury said in response to a query from SMSF Adviser that submissions from all interested parties are being considered in the ordinary course of policy development.
At last week’s technical summit, SMSFA chief executive Peter Burgess said the industry is expecting the draft legislation to be released by September before it passes through parliament next year.
Once the draft legislation is released, industry bodies usually have around four or five weeks to respond.
Mr Burgess said the passing of the legislation will depend on support from the crossbench, which he is hoping will ask for changes in regard to unrealised gains not being included in the calculations.
“We do expect this bill will be spun off into a Senate committee hearing and at that point there’s a good chance the SMSF Association will be asked to give evidence at that hearing, so that will give us another opportunity to push for a fairer calculation of earnings,” he said.
He said the focus of the SMSFA’s advocacy – once the draft legislation is released – will be centred around this issue to ensure that the government, and especially the crossbench, understand the impact it will have on the SMSF sector.
In May, Treasury told the SMSF Adviser the proposed super tax will not disadvantage any group and allows for both APRA-regulated and SMSFs to report on the same basis.
“The government’s approach to calculating the tax liability under the Better Targeted Superannuation Concessions measure balances simplicity of design with equity by leveraging existing fund reporting requirements,” a spokesperson from Treasury said.
“It treats individuals equally in applying a tax on large balances, whether they have an SMSF or are invested in an APRA-regulated fund.
“The alternative approach of reporting actual taxable earnings would require significant changes in reporting by APRA-regulated funds that would come at a cost to all their members, not just those with high balances.”
Some APRA funds already provide members with the ability to choose their own investments and provide the accounting and tax entries for those investments. So why are they proposed to be excluded?
The Assistant Treasurer has also replied to my questions regarding the treatment of defined benefits. He states that the Government has undertaken “targeted consultation with the superannuation industry and relevant stakeholders on the most appropriate way to achieve commensurate treatment for defined benefit schemes”.
Is anyone aware of these consultations?
In response to Kym, this is the logical solution, that Treasury knocked back as being too difficult. SMSFs can easily produce this information. But nothing in this proposed legislation is logical. It beggars belief! And most people and the media do not understand the import of it, which suits treasury’s agenda.
APRA Funds report a ‘net realisable value’ but not pension drawings so the ATO will be required to go back to large funds for this information. There is already a kink in the proposed simplicity. To level the playing field, the SMSF return must be adjusted to enable more granular information. What is needed is a new reporting field for SMSF member information to show the taxable income attributable. Whilst this means system enhancements for the ATO, it doesn’t seem to be much of an impost in the long run. With that one extra data point, the SMSF member assessment can be done without further consultation from the ATO so would in fact be closer to the simplicity objective being aimed for.
Generally, there seems to be an acceptance that extra tax will be payable for larger balance superfund members, however, the sheer unfairness and disparity of the current proposal is what is at odds. SMSFs run standard accounting so are well placed to be able to provide the information needed for the fair impost of this new tax.
What wrong Kym? What’s unfair about taxing unrealised capital gains at 15% and then realised gains a further 10%. It ends up being a net 23.5%, co-incidence that it equates to CGT at the top marginal rate?
Put your money in super for the long run, trust the government they say.
In no place in the tax act is unrealised gains presently taxed under any circumstances.
The argument that APRA funds can’t afford the IT upgrades to report as easy as SMSF’s and that we want consistent rules across the sector. Yet in the same breath they are suggesting NALE/NALI provisions should not apply to large APRA funds but should apply to SMSF’s.
Can these people not see their own hyprocrisy?