Government to make moves on residency rule reforms this year
The government has confirmed that will be proceeding with both sets of rule changes for residency rules for SMSFs and will release a consultation paper this financial year, according to the SMSF Association.
Last year, the government announced in the October budget that it would be proceeding that it would be proceeding with measures proposed by the former Coalition government to simplify the residency rules for SMSFs, with a revised start date.
Speaking at the SMSF Association National Conference this week, SMSF Association deputy chief executive Peter Burgess said there had been some speculation that the Labor government may not proceed with both components of this reform.
Mr Burgess said the two components of the reforms originally proposed included removing the active member test and making changes to the central management and control test.
“We have now sought clarification from the Minister’s office and they have confirmed that it is their intention to proceed with both components of this reform,” he said.
“They’ve also told us that these changes are part of a broader package of reforms that are introducing for not just SMSFs but all taxpayers.”
Mr Burgess said the Minister has also stated that the government plans to release a consultation paper before the end of this financial year.
“Hopefully that will give this industry and opportunity to clarify some of the technical issues around applicable fund earnings which has led to a number of private binding rulings being requested,” he said.
The SMSF industry has been advocating for changes to the residency rules for a long time.
SuperGuardian education manager Tim Miller previously told SMSF Adviser that the active member test was always disproportionately unfair to SMSFs versus APRA funds as it required at least 50 per cent of all active (contributing) members to be resident members.
The proposed reforms to the rules would provide greater certainty to a large proportion of funds who would otherwise be borderline that they are able to satisfy the requirements of being an Australian super fund, he said.