Regulatory actions improved SMSFs in 2019
The ATO’s increasingly proactive stance as regulator of the SMSF sector has had a positive effect on the industry over the course of 2019, according to Heffron.
The SMSF administrator’s managing director, Meg Heffron, said the regulator had “definitely become more assertive and active” over the course of the year, and that taking “a much tougher stance” on issues like late lodgement of returns and breaches of super law was necessary for the health of the industry.
“The long-term success of the SMSF sector depends on showing that funds and those who advise them comply with the rules. That necessarily means punishing and eliminating those who wish to do damage,” Ms Heffron said.
“The industry as a whole therefore welcomes active regulation. It’s important the ATO keeps concentrating on the high-priority targets and retains its strong focus on supporting trustees to do the right thing.”
Ms Heffron added that the federal election had also had a major impact on the SMSF sector this year, with voters summarily rejecting any further changes to investors’ ability to plan for retirement.
“Whatever you think of negative gearing or the refunding of excess franking credits, the electorate certainly decided that changing the rules suddenly and without notice was fundamentally unfair on the retirement incomes of older Australians,” she said.
Ms Heffron predicted that the government’s review of the retirement income system would take centre stage among the SMSF community in 2020, as the fact-based review could uncover much useful data that could be used to improve equity in the retirement system.
“The retirement income review’s mandate to gather facts rather than make recommendations gives it enormous potential,” she said.
“If it were charged with making recommendations, political pressure might cause it to hold back on contentious issues. Instead, if compelling enough, facts about taboo areas might prompt major policy action.”
Among these facts could include the true impact of the exclusion of the family home from pension eligibility tests and the inefficiency of allowing retirees to take their super as a lump sum, Ms Heffron said.