Increasing maximum SMSF members to six is still official policy
The SMSF Association held its annual conference recently, which was addressed by Assistant Minister for Superannaution, Senator Jane Hume, who stated that it remains government policy to see an increase in the maximum number of SMSF members from four to six. Implementation of the Hayne banking commission recommendations was however a priority, she said. (See full speech here.)
“This proposed change is significant,” Hume said, “because it increases the flexibility of our self-managed superannuation sector. It will allow situations such as families with up to four children to be part of a single family superannuation fund.”
The Senator also emphasised to the SMSF professionals audience that the government is also committed to “improving the flexibility” of the super system for older Australians, with announcements made as part of the 2019-20 Budget still official policy, although not yet introduced as legislation.
These include allowing people aged 65 and 66 to be able to make voluntary contributions without meeting the work test, and giving the same group the ability to make up to three years of non-concessional contributions under the bring-forward rule. Another of these measures is to allow people aged below 75 to be able to receive contributions from their spouses.
Some changes however have made it to “bill” status. The Treasury Laws Amendment (2019 Measures No. 3) Bill includes a change to ensure that an appropriate debit value is given for market-linked pensions that are commuted or rolled over. “The current valuation method produces a debit value of zero in these circumstances, contrary to the policy intent,” Hume said. The legislation also seeks to ensure that death benefits that include life insurance proceeds are not subject to tax in the receiving fund when rolled over.
Other measures that are still committed to include allowing trustees with interests in both pension and accumulation phases during an income year to choose their preferred method for calculating exempt current pension income. The government has also announced plans to remove the requirement for superannuation funds to obtain an actuarial certificate when calculating exempt current pension income using the proportionate method, where all members of the fund are fully in the retirement phase.
Senator Hume stated that although the legislation for these changes is yet to be introduced, the government remains committed to passing this legislation ahead of the 1 July 2020 start date.
SG amnesty bill passes both houses and is set to become law
The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 has been passed by the Senate without amendment and is set to become law. The bill contains measures that allow employers to make deductible payments, without penalties, of outstanding superannuation guarantee charge (SGC) amounts if:
- they relate to the period 1 July 1992 until 31 March 2018; and
- they are paid during the amnesty period (24 May 2018 until 6 months after the date of royal assent — not received at time of writing).
However, interest calculated at a rate of 10% a year on the SG shortfall will still apply to compensate employees for late payment.