Change is as good as a holiday

[ What has changed and what could be changed for Self Managed Superannuation Funds [SMSF's] ]
by Michael Garrone Published

With 2015 now underway and the Murray Financial System Report released late 2014 it is a good time to consider what is coming up for Self-Managed Super Funds. 


As a short list: 

  • Firstly and most importantly a big welcome back to Megan Kelly who has just returned from maternity leave after having her second baby boy.  I’m sure many people look forward to touching base with Megan and the super team over this year. 
  • With a proposed ban on superannuation borrowing now out in the open, we know that now is a good time to consider if borrowing is for you and what it involves.  With this in mind we are presenting a superannuation borrowing seminar on Wednesday 11 February 2015 (click here for more details)
  • After a relatively slow 2014 we know that 2015 is looking like a big year for change with the Murray Financial System Report.  It has been some time since the last inquiry so a lot is expected. 

  The following key take-aways from this report for super are: 

  • While there is a proposed borrowing ban in the report we have known for some time that there would be change in this area.  We don’t think there will be a full ban.  But perhaps there will be new rules around what loan to value ratios are allowed and whether or not you can borrow from a related party. 
  • The report wasn’t necessarily bad news for the SMSF industry.  It gave the impression that the SMSF industry as a whole was a growing, healthy, vibrant area of the financial system. 
  • Again there will be considerations around the affordability of all existing super concessions.  For example, can the system sustain both tax free super funds in pension phase and tax free pension withdrawals for those over 60? 
  • When can we expect the government to make announcements in relation to the inquiry? We know that submissions close on 31 March.  After that we can expect some type of government announcement between April and budget night in May 2015. 
  • Can a super fund borrowing arrangement have a 0% interest rate on a borrowing arrangement with a related party?  No surprise here that the ATO recently released two decisions confirming that this will have negative repercussions where a SMSF is concerned.  In this instance the ATO confirmed that the earnings relating to this 0% loan will result in that income being taxed at 47% under the non-arm’s length income rules. While there is nothing wrong with a related entity making a properly documented loan it is now clear that normal arms-length commercial terms must be considered (this will be discussed in more detail at our upcoming seminar). 
  • The non-concessional contribution and refund legislation is now before Parliament and will take effect from 1 July 2013.  This will now allow members to get a full refund of contributions over and above the $180,000 limit or $540,000 limit where those caps are triggered.  No more will members be at risk of paying unnecessary excess contributions tax of 47% and close to 100%.  This has been a good common sense outcome for members where contribution mistakes occur. 

It will be another big year in SMSF and businessDEPOT will be there to guide you as changes occur.  In the meantime please feel free to come to our first seminar of the year [register here]  - dealing with potential changes to the borrowing rules sharing in our practical experience in this area.

If you have any questions or would like to discuss any issues further, don’t hesitate to contact a member of the Super team at businessDEPOT, or your usual businessDEPOT contact.

Michael Garrone

Megan Kelly

Kimberley Thompson

Amanda Neuendorff

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