On Tuesday night, the government announced that it would remove the “outdated” anti-detriment provision, which is complex and inconsistently applied across superannuation funds.
While some are concerned that this will result in heftier taxes for adult children, SuperConcepts' general manager for technical services and education, Peter Burgess, believes there are considerable positives for the SMSF sector in this repeal.
Mr Burgess said anti-detriment payments has been one of the few areas that an APRA fund has an edge over an SMSF, because it’s considerably easier for a large fund to work through the payment mechanism.
“You’ve got to fund anti-detriment up front,” Mr Burgess told SMSF Adviser. “It’s a lot easier for larger funds which have the capital to do that,” he added.
“In the SMSF world, it’s difficult, in some cases impossible, for an SMSF to pay an anti-detriment payment. In the past some people may have held off moving to a SMSF because of that reason,” he said.
As a result, he believes this budget measure may result in more people setting up SMSFs.
“In the past, some people may have held off on setting up an SMSF, because they didn’t want to lose that anti-detriment benefit,” he said.