SMSF Post-Election Update
SMSF Post-Election Update
With the Federal Election called in favour of the Liberal Party, SMSF Trustees are likely to be spared from some of the more significant changes that were proposed by the Opposition Leader in the May Budget.
The proposed change that perhaps gained the most media attention, and the one that we received the most concerned queries about, was Labor’s plan to remove cash refunds for excess franking credits. SMSF Trustees and Members are surely breathing a sigh of relief that this proposed change is dead in the water. This means that SMSF’s with 100% retirement phase balances can continue to rely on refundable franking credits to maintain liquidity and cash flow during a period where minimum pension drawing requirements and increased costs of living can quickly erode cash reserves .
Labor’s proposal to further reduce contribution caps, re-introduce the 10% income test on personal concessional contributions, ban new LRBA’s, introduce a pension exemption limit of $75,000 for tax-free income in a superannuation environment, as well reducing other superannuation concessions, are also (thankfully) ‘off the table’.
So what proposals are back ‘on the table’ for discussion now that the election results are in?
- Australians aged 65 and 65 to make voluntary super contributions even if they do not need the current work test requirement;
- Spousal Contribution age limit to be increased from 69 to 74, allowing those members aged 70 years and over to receive contributions made by another person on their behalf (which they cannot currently do);
- Extend access to the bring-forward arrangements to those aged 65 and 66 (currently only available to certain members aged less than 65 years);
- The Liberal Party also looks to push ahead with their proposal to increase the SMSF member limit from 4 to 6 persons. This amendment was removed in order to pass the other measures in the Treasury Laws Amendment (2019 Measures No. 1) Bill 2019 , however the Morrison Government declared that they would continue to push for this measure as one of its key election policies. The view is that to do so will allow more families to take control of their retirement savings.
The Government has also guaranteed “no new taxed on superannuation”, however no timeframe for this promise has been given.
We are also still awaiting confirmation as to whether the widely criticized ‘3 year audit cycle’ for some SMSF’s will be introduced. Under current legislation, SMSF’s are required to have their financial statements audited annually before lodgement of their Annual Return.
It’s important to remember that the above proposals are just that – proposals – until they pass both houses and receive Royal Assent. However we will keep you all in touch as more information comes to light.
In the meantime, if you have any questions or concerns about the position or future of your SMSF, please don’t hesitate to contact us to discuss your personal situation in greater detail on 07 5437 9900.