SMSF Association focused on easing administration burden

With the Affordable Advice Review set to dominate the financial advice and advocacy industry in the coming years, the SMSF Association has submitted a series of targeted recommendations ahead of this year’s Federal Budget.

Rather than muddying the waters around education standards, or the compensation scheme of last resort (CSLR), the Association’s submission is squarely focused on easing the administration burden faced by practitioners in their day-to-day lives.

Chief among these recommendations is the recommendation that the increasingly complex Transfer Balance Cap, used to cap super balances and the tax exemptions they provide, be simplified. According to Association CEO John Maroney, “the introduction of indexation on 1 July 2021 has added greater complexity to the superannuation system.

“As our submission points out, the system has shifted from having a single cap to individual caps ranging from $1.6 to $1.7 million. This is causing confusion and increased costs across the sector.” The SMSF Association says that a single cap should be put in place for all, in an effort to reduce costs, uncertainty and benefit all stakeholders. And it clearly makes sense given the comments already received on the proposal.  

Sticking with administration issues, which are dominating the time of the dwindling adviser numbers across the country, the Association also recommends that ambiguity regarding the how the Design and Distribution Obligations and Target Market Determinations apply to those opening SMSFs be removed, and the situation explicitly clarified. “We believe these provisions should not apply to the establishment of an SMSF, when adding a new member to an SMSF, or when starting a pension in an SMSF,” Maroney explains.

Small business capital gains tax(CGT) concessions have not been reviewed in some time, and should be prioritised, says SMSFA, particularly given the likelihood of a growing number of business exits following the experiences of the pandemic. Finally, it suggests offering more flexibility to the ATO that would allow it to avoid penalising members and protect unused concessional contributions when Super Guarantee payments were not made on time by their employer.

A copy of the submission is available here: