SMSF trustees escape budget scrutiny – for now
Changes to superannuation may not have been a focus of this year’s budget, but trustees shouldn’t deduce from this that super is entirely off the government’s radar.
The government did hold true to its promise not to make any drastic changes to super back in the May Federal Budget, which should allow SMSF trustees to breathe a sigh of relief, at least for the short-term.
However there were some minor changes to take note of, notably the small increase to the penalty units that the ATO can levy if trustees breach any superannuation laws. These penalties can be significant. For example, if trustees are not following record-keeping guidelines or illegally lending money to a member, the minimum penalty (five units) cost has risen to $900 and the maximum penalty (60 units) has gone up to $10,800.
One of the positive changes is the increase in flexibility for terminally ill patients to be able to access their superannuation. This will impact both superannuation funds and SMSFs given the greater legal capacity for trustees to accommodate their members in cases such as this.
Changes to Age Pension assets test
Perhaps one of the bigger changes that will have a significant impact on couples in an SMSF is the tightening of the Age Pension assets test means. Under these amendments couples who own a home and receive a part-pension will lose their payment if they have assets exceeding $823,000 in value.
Future changes on the horizon
It’s understandable that SMSF trustees may feel that government superannuation policy is a moving beast and that due to their larger super balances, each time a change in retirement policy occurs they may be hit hard.
However, it’s not all doom and gloom. It seems the government has been paying attention to the growing public dissatisfaction with retirement policy changes and there is now bipartisan commitment to striving for greater stability in this area.
The prospect of further changes to superannuation has been widely discussed in the media and by politicians and while not many were adopted in the budget, they may be back on the table in the New Year with the recommendations of the white paper into Australia’s taxation system. This document is expected to contain suggestions for structural changes to super and retirement policy and is likely to be released before the next election.
Steps trustees can take now
As an SMSF trustee; you can be doing things to prepare for future changes, including maximising super contributions as well as equalising balances between spouses.
Thinking now about what your cash flow needs may be down the track and structuring your future investments to match these needs will provide you with more flexibility when changes to super and SMSFs occur and may save you time and money.
This insight may contain general financial advice and was prepared without taking into account your objectives, financial situation or needs. Before acting on any advice, you should consider whether the advice is appropriate to you. Seeking professional personal advice is always highly recommended. Any forward looking statements are based on current expectations at the time of writing. No assurance can be given that such expectations will prove to be correct.
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Whether you’ve had the same super fund or investment structure in place for some time, your personal circumstances and balance may have changed – which is why it makes sense to review your arrangements. But where do you start? By using our simple guide, we show you five key areas you should consider when comparing options, which can help make it easier to make a more informed choice about your super and determine the most appropriate solution for you.