As reported yesterday, Mr Morrison indicated that transitional provisions will apply to SMSF members that were engaged in “sophisticated financing techniques” to purchase assets within an SMSF.
Speaking to SMSF Adviser, senior manager for strategic advice at Perpetual, Colin Lewis, said this move from the government indicates it is possible that other elements of the lifetime cap contribution, such as the date it is effective from, could also change.
“It’s crystal ball speculation of course, but these things do happen. And the government have already made moves that are a huge relief for people with existing contractual obligations,” Mr Lewis said.
“Remember there’s also a consultation period with industry to come, so anything is possible,” he added.
Mr Lewis’ thoughts reflect the sentiments of McPherson Super Consulting director Stuart Forsyth, who said the move from Mr Morrison may be a sign of further positive developments to come.
“From our point of view, this creates an expectation that they’ll look at other reasonable cases as they come up. It gives us heart that there will be some scope to have influence still on these measures if the Coalition returns to government and if they’ve got control of the Senate,” Mr Forsyth told SMSF Adviser.
I suspect that the original aim was to prevent the re-contribution scheme where someone withdrew a $500k lump sum and re-contributed it as a tax free non-concessional contribution. This had nothing to do with increasing retirement income and was solely aimed as a tax minimisation strategy.
A better way of preventing this, if that was the aim, would be to put an annual limit on N-C contributions, say $30K for those under 50 and $50 – 100k for those over. That would stop the strategy but still enable people to top up super close to retirement.