I attended the taxation institute national conference last week in Perth. There as a very detailed paper & presentation from Sharon Long regarding the current hot issues in superannuation which I have listed below:-
- 1. SuperStream Measures
These reforms will change the way members, trustees and advisors will interact with superannuation funds by introducing a raft of measures to enhance the “back office” efficiency of super funds by implementing new data & ecommerce standards, allow TFNs to be used as the primary locator of member accounts and allow APRA and the ATO to issue & enforce standards for superfunds and employers. These measure will be funded via a $467M levy to be imposed on super funds over seven years with approx. 25% of this to be levied in the current tax year.
One of the new standards to be implemented from July 2013 will be that all member rollovers between super funds must be transferred within 3 working days via EFT. So no more cheque rollovers and large industry funds wont be able to delay member roll overs for more than 3 days. From a member & an advisors point of view this will be a great improvement as large funds can at the moment seem to drag out the rollover for a very long time
Employer contributions into super funds will also only be allowed via EFT into the future although there are transitional arrangements that mean that large employers have until July 2014 to stop using cheques and small employers have until July 2015.
Payslips issued by employers from July 2013 will need to not only detail superannuation payable for each employer but also document when the payments have been made. On the flip side super funds will from July 2013 also need to notify members if they haven’t received contributions on their. This will effectively allow employees to actively monitor if their superannuation is being paid.
- 2. Specific Changes effecting SMSFs
SIS Regulation 4.09A now applies to SMSFs from 7 August 2012 and requires trustees to keep SMSF money and other assets separate from other assets held by the trustee. Although this was always required the change is that it is a reportable audit issue as well as trustee can be liable for penalties if they breach this regulation. As previously discussed and advised this is just another good reason along with others to have a specific corporate trustee for all SMSFs
SIS regulation 8.02B will apply to the 2012/13 income year and beyond and require financial statements of the superannuation fund to be prepared based on the market valuation of assets. Previously SMSFs could choose either historical cost or market valuation for recording assets. The ATO have released an information circular regarding valuing assets of an SMSF and it can be accessed here
SIS Regulation 4.09(2)(e) effective for the 2012/13 year requires SMSF trustees to consider whether the fund should hold life insurance cover for one or more fund members. This requirement should be considered, reviewed and included in the funds investment strategy. Again documenting & evidencing the trustees decisions regarding insurance should be done regularly.
The ban of off market transfers to SMSFs was originally expected to apply from 1st July 2012 but has been deferred to July 2013. Draft legislation has been issued for public comment and is expected to be law by July 2013. Hence if anyone is considering transferring assets into an SMSF off market they need to do it before the end of this year.
- 3. Additional 15% contribution charge for high income earners.
Despite not having any legislation at this stage to work from the Budget announcement from May 2012 is expected to apply in this current tax year to tax super contributions at 30% for people earning over $300k per year. It would seem it’s a case of back to the future in that this measure is to act in a similar way to the surcharge abolished by the previous government in 2005.
- 4. Concessional Contributions Caps for over 50s
Effective from July 2012 the concessional (tax deductible) contribution cap has been reduced for over 50s to $25k per year in line with all individuals and is no longer dependant on age.
The non-concessional (non deductible) contributions caps remain unchanged at $150k per year or $450k if you utilise the bring forward rule.
Should you have any further questions or need specific advice regarding these matters please don’t hesitate to contact my office