Investors
P: 1800 658 404
View full details
Financial advisers
Contact your state account manager or our client services.
View full details
Shopping Centres
For leasing, casual leasing and brand solutions enquiries
Contact Us
Connect with us to stay up to date with news and updates.

LinkedIn

What’s next for SMSF regulation?

On 1 July this year the most significant changes to the superannuation system in more than a decade came into force, with more changes slated for future years.



It’s essential for self-managed super fund (SMSF) trustees to be across these and all future changes to the super system to ensure their funds remain compliant. The risks for non-compliant funds are onerous and include fines and deregistration in the most serious cases.   

Some of the changes introduced at the start of the financial year included the introduction of a $1.6 million limit on the funds that individuals can hold in their super fund, the reduction of the annual concessional super cap to $25,000 and a $100,000 limit on the amount that can be contributed each year to a super fund on a concessional basis.

While it’s likely there will always be tweaks made to the superannuation system, we probably won’t see changes of the magnitude experienced this year for many years. 

One area that is likely to see further changes will be contribution caps, says Greg Einfeld, director of SMSF specialists Lime Super.  

“These caps have changed on average every two years over the past decade with the government constantly balancing higher caps to win votes, versus lower caps to collect more tax,” says Einfeld.

“It is likely that the government has underestimated the additional tax that will be collected from the recent reforms, and hopefully any tax windfall will be spent on removing the work test so that people between the ages of 65 and 74 who aren’t working will be allowed to make super contributions,” he argues.

However, Pete Pennicott, a director and financial adviser with financial advice firm Pekada, has a different view.

“After such dramatic changes coming into force this financial year, it would seem unlikely further changes to contribution caps will be made in the short term. Longer term the hope would be common sense prevails and the caps are increased to a level that encourages people to save for their retirement,” he says.

What’s next?

The next major change for super fund compliance will be real time reporting. This will require the reporting of certain transactions such as pension commencements and commutations to the Australian Taxation Office (ATO) as soon as they take place.  

“These changes will create an additional compliance burden for small accounting firms and genuine do-it-yourself trustees, and will lead to further outsourcing and consolidation in the SMSF sector,” Einfeld says.

Pennicott says preservation age is another regulatory lever that could be pulled in the future, especially as life expectancy continues to rise. 

“Longevity risk is a serious consideration with retirement planning already and will only become more significant as this trend continues. So it makes sense that regulation may respond to this in the future by changing when people can access their super,” he suggests.

How are SMSFs responding to changes?

Across the board, the feedback from advisers is that it was a busy period leading up to the end of the financial year, with trustees working hard to ensure their SMSFs met their obligations.

“As everything was telegraphed well in advance and industry bodies made excellent resources accessible to manage the change, it was a relatively smooth transition for trustees,” says Pennicott. 

“Providing trustees did their research or sought advice, they should be feeling confident that they are compliant,” he adds.

According to Pennicott, greater scrutiny on trustees knowing their roles, responsibilities and obligations is something that is likely to be high on the agenda in the future as the regulator seeks to ensure the integrity of the SMSF sector is maintained. 

“It is a rapidly growing sector, so there will be scrutiny on any teething problems as the sector matures. It makes sense for regulators to ensure the individuals responsible for their SMSFs are informed and have the necessary skills to run their fund, and if not then perhaps they should not be responsible for an SMSF,” he adds.

The message to SMSF trustees is the onus remains on them to ensure their funds remain compliant now and into the future. It’s essential to keep a close eye on any upcoming regulatory changes to ensure their fund always meets its regulatory obligations, even in years such as these when the scope of the changes is vast. 
Taking your SMSF to the next level
Download free ebook

Sign up to our newsletter!

Receive regular insights and marketing communications including a weekly update of trending news and market insights that are tailored for SMSF trustees and investors.
AMP's Australian operations are bound by the current Australian privacy legislation which outlines how organisations should manage and use personal information collected and held about their customers. AMP Privacy Policy
Sign me up Not right now. Thanks

Sign up to our newsletter!

Receive regular insights and marketing communications including a weekly update of tending news and market insights that are tailored for SMSF trustees and investors.
AMP's Australian operations are bound by the current Australian privacy legislation which outlines how organisations should manage and use personal information collected and held about their customers. AMP Privacy Policy
Sign me up