Treasury floats legislation for transfer of early release powers
The government has released draft regulation to support the transfer of responsibility for early release of superannuation to the ATO, which could reduce potential for malpractice according to a technical expert.
Minister for Revenue and Financial Services Kelly O’Dwyer said the regulations provide the necessary administrative changes to reflect the transfer of responsibility for early release on compassionate grounds from the Department of Human Services to the ATO.
Ms O’Dwyer said the regulations complement the legislation giving effect to this transfer of responsibility which was introduced into Parliament on 7 February 2018.
“The regulations require the ATO to directly notify a member’s superannuation trustee when it has authorised the early release of funds, removing the need for that trustee to independently confirm the amount authorised for release,” she said.
“At what are often times of great stress and concern for the individuals involved, these changes will cut the administrative burden for superannuation trustees and will help successful applicants receive their authorised funds sooner.”
Ms O’Dwyer said the draft regulations will also improve the “integrity of the current processes and aim to expedite the release of funds to successful applicants”.
The exposure draft regulations and explanatory statement are available here.
SuperConcepts executive manager of SMSF technical and private wealth Graeme Colley said the draft regulations could be very beneficial and resolve some potential malpractice that’s been occurring.
“The ATO is already responsible for superannuation as a general rule but the notification by the ATO to the relevant superannuation fund is important because that seems to be solving some problems that may have arisen,” said Mr Colley.
Mr Colley said there have been some suggestions that individuals may have been going around to a number of different funds of which they were a member and asking for a release of benefits from each fund.
“I don’t know whether that’s the case but it’s good that the ATO is notifying the fund that’s been nominated to pay the benefit so that’s a bit of a change there and might clean up a couple of malpractices or things that might have been happening from the past,” he said.
“It will make the communication clear not only with the member, who wants the release of the benefit, but also the superannuation fund that’s going to release the benefit so it cuts down any issues relating to that.”
While Mr Colley said while there doesn’t tend to be requests for a hardship grant with SMSFs, there are sometimes requests for early release on compassionate grounds.