Government is playing politics with super legislation: adviser
Politics will play a large part in whether Treasury takes onboard any of the recommendations submitted in regard to the $3 million super cap proposal, says one of the country’s leading advisers.
In the latest SMSFS Adviser podcast, Smarter SMSF co-founder and CEO Aaron Dunn said it is not unreasonable to say the Coalition would have a much more favourable view of the SMSF sector compared to the current Labor government.
“So it becomes a much harder case to argue when you’re dealing with Treasury on issues that you’re trying to defend the SMSF industry with the current government against the former government,” he said.
“That’s the nature of the beast.”
The inherent party politics presents the SMSF industry with some major challenges, said Mr Dunn, one of which is the perceived inequities that have arisen in both the NALE/I rules and the $3 million superannuation proposal between the big APRA-regulated funds and the SMSF sector.
“We have a different set of rules that apply for the proposed super cap, and the non-arm’s length expenditure rules, yet Treasury were not interested in setting different rules and factors, having a uniform set of rules when it comes to the $3 million additional earnings tax for members.
“In the same budget, we ended up with two pieces of legislation being announced to impact the SMSF sector, and polar opposite approaches to that and again, that just rubs the industry up the wrong way.”
Mr Dunn said the sector is still waiting to hear from Treasury about the final version of the proposed legislation to understand how it will work.
“We’re also waiting to get some kind of movement on the legislating of the Objective of Super, which was also expected soon,” he said.
“The intention originally was that the Objective of Super was going to be the foundation stone for all policy going forward. And then when the Labour government come out it was quite interesting, because at the SMSF national conference earlier this year, we saw the assistant treasurer Stephen Jones get up and talk about the importance of legislating in the Objective of Super.
“We thought this is quite interesting, a foundational piece of work that will help direct policy, but three days later we saw the Prime Minister and the Federal Treasurer come out and announce the $3 million issue.”
Mr Dunn said the changes around the $3 million cap come back to the sustainability of tax concessions, fairness and equity which are underpinned by the Objective of Super.
“I guess the view was they [the government] wanted to have this all wrapped up by the budget, yet here we are several months after and we don’t really know where they’re heading with this at this point in time,” he said.
“You start to get the feeling that the $3 million cap is the bit that’s leading with the chin rather than the Objective of Super, in an SMSF context anyway.
“It’s a little bit of a cart before the horse type situation, putting one piece of legislation out before you’ve got this foundational piece.”
Mr Dunn said it seems that from the government’s point of view, they are trying to shift blame for the legislation.
“The QAR is a perfect example of this because they say, ‘Well, this is not legislation that we were doing, but we’re happy to consider it’,” he said.
“But we now want to undertake further review because of x, y, and z. They’re latching on to that a little bit, I think, from a policy point of view.
“The Objective of Super is something that has been around going back to 2016 and even 2013, in the financial system inquiry where it was originally recommended.
“It’s these foundational pieces of work and yes, they have got to get right, but I think a lot of the heavy lifting has been done through multiple reviews.”
