Referring to the superannuation reforms package, tranche two, the SMSF Owners’ Alliance (SMSFOA) says since the legislation introduces “entirely new concepts and procedures”, more time should be allowed to consider how it will work in practice.
It pointed in particular to issues for SMSFs in relation to the practicalities of getting valuations assessed by the necessary deadlines.
“The draft legislation anticipates that on or before 1 July 2017, people will know their superannuation balance down to the last dollar,” the SMSFOA said.
“However, for self-managed funds in particular, it can take months for the trustees and the fund’s accountant to assess the value of the assets in the fund, identify the earnings, calculate the tax due and prepare tax returns.
“As there are more than half a million self-managed funds, most with multiple member accounts, we expect there will be a serious compliance logjam in 2017 as fund trustees and their accountants and auditors come to grips with the new requirements.
“We anticipate there will be a lot of confusion and honest mistakes made before the system is bedded down.”
The SMSFOA also argued that the $1.6 million transfer balance cap is “just as retrospective” as the proposed $500,000 non-concessional cap, which has now been withdrawn.
“The tranche two draft legislation is also retrospective, as it catches people who had already moved their superannuation into pension mode, and will require these people to re-engineer their superannuation and pay tax for which they were not previously liable,” the alliance said.
“Had they known this change was coming, they might have made different decisions about when to retire and how to order their financial affairs.
“It is a long-recognised principle of taxation law that it should not be changed with retrospective effect to the disadvantage of those who had abided by the law. The right thing to do would be for the government to ‘grandfather’ the existing rules under which people have saved for their retirement and apply the new measures prospectively.”