SMSF adviser logo

Budget tinkering around the edges of superannuation

By Keeli Cambourne
May 16 2024
2 minute read
4 View Comments
lyn formica new smsf
expand image

Although there was a notable absence of any major superannuation announcements in Tuesday’s federal budget, there were several secondary inclusions of which SMSFs should be aware.

Lyn Formica, head of education and content for Heffron, said one of the announcements that will impact SMSFs is the government’s decision to no longer proceed with changes to strengthen the ABN system.

Formica said in the 2019–20 budget the government proposed making changes to protect the ABN system. In an SMSF context, under these changes, failure to lodge an SMSF’s annual return for two or more income years could have resulted in the fund’s ABN being cancelled.


“Fortunately, the current government has now announced it will not be proceeding with this measure,” Formica said.

Meg Heffron, CEO of Heffron, said the announcement around deeming rates will be welcome news for people receiving the aged pension.

“Deeming rates will be frozen for another 12 months, and is of course highly relevant for people receiving the age pension, who have financial assets,” Heffron said.

“It is also relevant for wealthier clients who are receiving the Commonwealth seniors health care, because of course, whilst some of them have pensions that don't count at all, some of them have account-based pensions that do count for this and the incomes worked out using those deeming rates.”

There was also money allocated to support the SuperStream Gateway Network Governance Body. Formica said it is hoped this money will be used to improve the operation of the SuperStream system and iron out some of the existing headaches.

Although the cost of the proposed Division 296 tax bills was not included in this year’s budget, the budget papers revealed the government has set aside around $9 million to work out its application to defined benefit interests held under government-funded superannuation schemes.

According to budget paper 2, the government will allocate $9.2 million over four years from 2024–25 to the Commonwealth Superannuation Corporation and the Department of Finance to implement the tax for members under Commonwealth defined benefit superannuation schemes.

An additional $1.1 million per year will also be set aside to implement the Better Targeted Superannuation Concessions, which is currently before the House of Representatives.

Aaron Dunn, Smarter SMSF CEO, said the government also announced $187 million in funding for the ATO to better protect taxpayer data and Commonwealth revenue against fraudulent attacks on the tax and superannuation systems.

“The funding will upgrade the ATO’s information and communications technologies and increase their fraud prevention capabilities,” he said.

“This will ensure the ATO has dedicated resources to manage increasing risk, prevent revenue loss, and support victims of fraud and cyber crime.”

He added that for SMSFs, two previous budget issues remain outstanding which the government has indicated their commitment to legislating.

The first is the two-year legacy pension conversion which Dunn said would have been “timely in light of the proposed Division 296 tax changes from 1 July 2025”.

“Some excessive pensions can already convert from capped defined benefit income streams (CDBIS) under the current law. Draft regulations in respect to defined benefit pensions will make these legacy pensions most complicated and expensive to manage, so an avenue to exit these was the industry’s preferred path,” he said.

Dunn said the other former announcement the sector would have liked to have seen was the relaxation of the residency requirements for SMSFs and SAFs by extending the central control and management test safe harbour from two to five years for SMSFs and removing the active member test for both fund types.

“With a federal election needing to be held on or before 27 September 2025, it becomes very clear that next year’s budget will be much more expansive on policy commitments towards tax reform, which you would expect will incorporate a level of change to superannuation as well,” he said.

“The next 12 months will see the finalisation of the objective of super, many SMSFs contemplating the impact of the Division 296 measures, further consultation about superannuation in retirement, and arguably more headwinds within the economy.”

You need to be a member to post comments. Become a member for free today!