Speaking to SMSF Adviser, Senator Sinodinos said there were many “good reasons” why the SMSF sector had developed, but that the underlying “philosophy” of personal decision-making and responsibility needs to be upheld.
“Our philosophical position is it’s a light-touch regulatory regime, and therefore people have responsibility for their financial decision-making and it’s not up to government to compensate them and potentially create a moral hazard, which encourages excessive risk taking,” Mr Sinodinos said.
The Assistant Treasurer also responded to claims made by Australian Workers Union boss Paul Howes – previously reported by SMSF Adviser – arguing that Mr Howes has an ulterior motive for criticising the SMSF sector.
“The real answer to Paul Howes is that people like him prefer the money to be tied up in the industry funds where people like [him] make decisions in the name of their members,” he said.
More broadly, Senator Sinodinos listed the attributes of the SMSF sector the government supports, indicating the government intends for SMSFs to be a permanent fixture of the superannuation system.
“It’s a free country so if you decide you’re going to manage your super yourself, you should have that opportunity,” he said.
“The fact that people in increasing numbers have voted to do so suggests that they’re keen to manage their own financial affairs and that they’re keen to, if you like, have more control over the decisions which have previously been made in their name.
“From a Liberal Party point of view – if I’m being crassly political – we love the philosophy of people who are taking decisions and taking responsibility for themselves. That’s why it’s got a separate light-touch regulatory regime, principally through the tax office.”
Elaine – the rules and regs regarding SMSF’s are ostensibly the same as apply to all super funds (e.g. sole purpose test, separation of assets, borrowing and tax rules etc.). The difference is the administration.
The rules are complicated and extensive but for professional administrators running public offer funds, knowing the rules and ensuring compliance is their job. This is not the case with an SMSF – the words “self managed” are there for a reason.
This is not a criticism of SMSF trustees who presumably understand this before setting up the fund. If the regulations were simplified and/or reduced, everyone would benefit – not just the SMSF sector.
It is wrong to assume that SMSF`s have been singled out in regards to rules and regs.
“Our philosophical position is its a light-touch regulatory regime”
Light touch? Excuse me while I go pick myself up off the floor when I finish laughing.
I imagine there would be many many more SMSF’s if the regulation wasn’t so extreme.
So why then does the ATO interfere and tell trustees to be more careful about investing? They already know. Trustees of SMSFs play with their own money, they are far more careful and don’t need constant reminding. Of course some will fall by the wayside but there are 509,000 funds and 99.99% of them are properly run.
Thats why its got a separate light-touch regulatory regime, principally through the tax office.
Bloody hell. If he describes the ATO as ‘light touch approach’ I would hate to think what ‘heavy handed ‘ may mean.
I think a good case can be made for the regulatory function be taken from the ATO because their primary role is tax & revenue collection NOT supervisory.
I agree with Arthur’s take on SMSF’s and have no difficulty accepting responsibility for my own decisions.