SMSFs

The proposed tax on super balances exceeding $3 million is still flawed and should not be legislated in its present form, the peak body representing self-managed superannuation funds said, imploring Senate cross-benchers to ice the bill.

Planning one’s legacy involves a series of strategic decisions to protect and distribute assets efficiently – and with a record $3.5 trillion set to change hands over the coming decade, it’s key to Australia’s future financial security. Here, we explore tips to help investors optimise their wealth transfer outcomes.

The government’s plan to increase taxes on super balances above $3 million will have a costly impact on the SMSF sector, with thousands of members likely to face liquidity stress, according to new research from the University of Adelaide’s International Centre for Financial Services.

The government’s plan to include unrealised capital gains in earnings calculations when it doubles the tax rate for super balances above $3 million is “flawed policy”, according to the SMSF Association. It says there’s an easy fix.

The plan to align the tax treatment of off-market share buybacks with that of on-market buybacks puts smaller companies, self-funded retirees and retail investors at a disadvantage, according to portfolio manager Scott Kelly, who worries the proposed changes are “just the beginning”.

Investing in property within a self-managed super fund offers the potential for substantial tax savings, but it’s not for those lacking property market experience. Sophisticated investors should consider several key factors, including costs and compliance, to ensure success within their SMSFs.

In a review of financial product issuers’ compliance with requirements meant to ensure complex and high-risk investments are kept out of the wrong hands, the regulator found room for improvement – and reminded issuers of its enforcement powers.

Following the Labor government’s decision to shelve a program meant to streamline and modernise Australia’s business registry system, the SMSF Association has argued for keeping “key aspects” of the scheme that would have meant material improvements for corporate trustees and the SMSF sector.

The third annual Your Future Your Super performance test saw just one MySuper product fail, while 12 per cent of trustee-directed products failed in their first year subject to the test. The results follow a report showing superannuation assets jumped in value since June 2022.

The ATO said failures to preserve superannuation benefits and comply with auditing requirements led it to disqualify 753 SMSF trustees this year and issue nearly $30 million in penalties, as it warned of increased scrutiny going forward.

With Treasury currently considering amendments to provisions governing non-arm’s-length income and expenses (NALI/E), the SMSF Association and other professional bodies say the ATO should not rush a controversial tax determination about NALI and capital gains tax in SMSFs.

While she acknowledged some in the industry may be resistant to expanding the scope of who can provide advice, the principal architect of the Quality of Advice Review urged support for its adoption, saying her recommendations are good for advisers and, most importantly, for consumers.