The Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume, has reassured self-managed super fund trustees there will no changes to the tax treatment of superannuation in this Parliamentary term.
Hume also said the Government could consider lifting the $25,000 concessional contribution cap.
Waiting until the Q&A session of her address to the SMSF Association Investor Expo in Melbourne on Friday, the Victorian senator used the occasion to say that although there would be changes to superannuation, how it is taxed is off the agenda.
Acknowledging the magnitude of the changes introduced in the 2016 Budget and the subsequent legislation that took effect on 1 July 2017, she said: “The Government’s focus must be on improving the efficiency of the system, lowering costs and promoting informed member choice and competition.
“It falls to government to steadfastly maintain this focus for the sake of future generations. That sounds lofty, but it is actually practical.”
Hume also told trustees that the Government could consider lifting the $25,000 concessional cap, a limit, in her words, “that seems a little low”.
There has been concerted lobbying by the SMSF sector to have the cap lifted, especially for individuals nearing retirement who have the financial means to increase their super contributions, so the Minister’s comments are certain to prompt fresh submissions to the Government on this contentious issue.
Hume, who comes to the portfolio with a background in retail and industry superannuation and demonstrated in her speech a strong grasp of the issues, said although the SMSF sector was a significant and growing portion of the industry, holding 27 per cent of total super assets, “the complexity and administrative demands of running an SMSF have slowed the growth in new funds. In fact, the commencement rate for news funds is at a 10-year low”.
She said the Coalition has always believed that SMSFs were an integral part of the superannuation ecosystem and was taking active measures to support this sector.
“As such, we announced in the 2018/19 Budget measures to reduce red tape for superannuation funds from 1 July 2020. They will be especially valuable for SMSFs that don’t enjoy the economies of scale of larger funds.
“The Government will allow superannuation fund trustees with interests in both the pension and accumulation phases during an income year to choose their preferred method for calculating exempt current pension income (ECPI).
“Similarly, the Government has also announced it will remove the requirement for superannuation funds to obtain an actuarial certificate when calculating ECPI using the proportionate method, where all members of the fund are fully in the retirement phase.
“It is our hope that these changes will make life easier for super fund trustees and lower their cost of compliance.”
On the issue of allowing eligible SMSFs to move to a three-yearly audit cycle – also announced in the 2018/19 Budget – Hume said the Government had undertaken extensive public consultation on this measure, and the outcomes of the consultation are being considered.
Finally, she expressed disappointment in the Government’s failure to secure bipartisan support for legislation to increase the maximum number of SMSF members from four to six.
“This would have enabled families with up to four children to be part of a single family super fund. It remains government policy to enact this important change, and it will be progressed in line with the Government’s legislative priorities.
“Despite this small setback, the Government has a demonstrated commitment to nurturing the development of the SMSF sector. We want to make it easier for those who are actively engaged in the management of their retirement savings to maximise their returns, while maintaining compliance and minimising red tape.”