Government's "Stronger Super" package: contains SMSF proposals
On 16 December 2010, the Government released a package of "Stronger Super" reforms in response to the recommendations by the Cooper Super System Review. The Government expressed support for 139 of the 177 recommendations by the Cooper Review aimed at improving the governance, efficiency, structure and operation of Australia's superannuation system.
The Assistant Treasurer, Mr Bill Shorten, said the package of reforms include a new low-cost and simple default superannuation product called "MySuper" from 1 July 2013, heightened duties for superannuation trustees, and support for the Review's "SuperStream" proposals. The Assistant Treasurer said a consultative group will be established in early 2011 to undertake consultation with stakeholders on the implementation of the reforms.
While the Government agreed with most of the 29 SMSF recommendations by the Cooper Review, it has rejected some of the proposals. Key SMSF items include:
- investments in lifestyle assets - the Government rejected the recommendations to prohibit in-house assets and ban SMSFs from investing in collectables and personal use assets. Consistent with its election commitment the Government will instead introduce legislation to tighten, from 1 July 2011, the legislative standards on SMSF investment in collectables and personal use assets. Any existing SMSF holdings of collectables and personal use assets that cannot comply with the legislative standards will be required to be disposed of by 1 July 2016;
- Tax Office rulings - the Government rejected the recommendation to give the Tax Office the power to issue binding rulings in relation to SMSFs. Rather, the Tax Office will continue to provide non-binding advice to SMSFs;
- approved auditors - the Government agreed that ASIC should be appointed as the registration body for approved auditors and given the power to determine the qualifications (including professional body memberships), set competency standards and develop a penalty regime. The Government said ASIC, in consultation with stakeholders, will determine whether there are existing standards that can be used and will develop new auditor independence standards if necessary;
- administrative penalties - the Tax Office will be provided with new powers to issue administrative penalties against SMSF trustees on a sliding scale reflecting the seriousness of the breach. The Office will also be given the power to issue a direction to rectify a specified contravention and enforce mandatory trustee education;
- SMSF supervisory levy - the $150 annual SMSF supervisory levy will be increased (to a level yet to be determined) from the 2010-11 financial year;
- licensed SMSF advice - the Government agreed that the accountants' AFSL exemption for providing SMSF advice should be removed. The Government said it is currently consulting with industry on an appropriate alternative to the exemption as part of the Future of Financial Advice process, including a restricted licensing framework.
DATE OF EFFECT: Most of the SMSF measures are proposed to commence on 1 July 2012. The tighter legislative standards for investments in collectibles and personal use assets will apply to new investments from 1 July 2011. Proposed amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 will commence on 1 July 2013 and amendments to the SMSF registration process will commence on 1 July 2014.