QUARTER II 2024 | ISSUE 046 | THE PREMIER SELF-MANAGED SUPER MAGAZINE
NO EXIT The status of legacy pensions
FEATURE
COMPLIANCE
STRATEGY
COMPLIANCE
Legacy pensions The current situation
Early access to benefits Time for a review
Unit trust investments Governing rules
Documentation Best practices
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COLUMNS Investing | 20 A new approach to fixed income.
Investing | 24 Active versus passive assessment.
Compliance | 30 Change in overseas pension transfer process.
Strategy | 34 Investing in alternative structures.
Compliance | 38 Early access of benefits.
Strategy | 42 Potential impact of AI.
Compliance | 46 Winding up an SMSF.
Strategy | 50
NO EXIT The status of legacy pensions
NO EXIT THE STATUS OF LEGACY PENSIONS Cover story | 12
Incorporated financial product fees.
Compliance | 52 Required record-keeping.
Compliance | 56 Implications of employee classification.
REGULARS What’s on | 3 News | 4 News in brief | 5 SMSFA | 7 CPA | 8 IFPA | 9
FEATURE
IPA | 10
Leading the way | 16
Super events | 58
Regulation round-up | 11
Industry impact of SMSFs.
QUARTER II 2024 1
FROM THE EDITOR DARIN TYSON-CHAN INAUGURAL SMSF ASSOCIATION TRADE MEDIA JOURNALIST OF THE YEAR
Where do we go from here? The saga of the proposed tax on total super balances over $3 million keeps bubbling away and it’s turning into a situation where just when you think it couldn’t get any worse, it does. And the most recent developments have got me asking: where do we go from here? Since the announcement of the measure, subsequent analysis has uncovered flaw after flaw associated with it from multiple perspectives, including its compatibility with the existing taxation system, core policy aspects and even the drafting of the relevant parliamentary bill. I’ve said on numerous occasions all this adds up to only one conclusion – all round it is a very poor piece of superannuation policy. The bill to bring in the Division 296 tax is still being debated in Canberra and the proceedings so far really do make you wonder what sort of rabbit hole we are heading into and exactly how dark and deep it will be. In the latest development, the Greens party has put forward a few amendments, I would describe as hare-brained, that it would like to see before it will give any support for the passing of the bill. This includes having one old anti-SMSF chestnut rear its ugly head again. To this end, the Greens want to ban the ability for SMSFs to use limited recourse borrowing arrangements (LRBA). This is because by their logic these gearing facilities allow more SMSFs to invest in the residential real estate market, in turn exacerbating the current housing shortage in Australia. Forget the fact there is no justification from a superannuation risk perspective,
from a factual point of view there is nothing to back the call up either. As the SMSF Association pointed out when the Greens declared their position, a reference to ATO 2021/22 statistics in combination with CoreLogic real estate data shows SMSFs only account for 0.7 per cent, or $76.9 million, of the country’s entire residential property market valued at $10.8 trillion. In layman’s terms you couldn’t even describe it as a drop in a bucket. The Greens also want the threshold of the tax to be lowered to $2 million. There’s a plan. If that was to be adopted, you can imagine how wide the net for this impost will be cast. Already the omission of an indexation mechanism to the measure means the tax will catch more Australians than the 80,000 originally estimated, so who knows what this number will grow to if $2 million is the trigger point. As you can see, the whole thing has degenerated into the proverbial dog’s breakfast. It highlights how problematic superannuation policy can be if a proposal does not have anything even resembling bipartisan support. But where do we go from here? Will these demands be seriously considered in any way, shape or form? And if not will the current bill experience an impasse that will prevent the measure from going through at all? Your guess will probably depend on whether you’re a glass-half-full or glass-half-empty person. Either way we can conclude this process has been most effective in further eroding people’s confidence in the superannuation system.
Editor Darin Tyson-Chan darin.tyson-chan@bmarkmedia.com.au Senior journalist Jason Spits Journalist Todd Wills Sub-editor Taras Misko Head of events and corporate partnerships Cynthia O’Young sales@bmarkmedia.com.au Publisher Benchmark Media info@bmarkmedia.com.au Design and production AJRM Design Services
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WHAT’S ON
To have an upcoming event featured on the What’s On page, please contact darin.tyson-chan@bmarkmedia.com.au.
SMSF Association
DBA Lawyers
Accurium
Inquiries: events@smsfassociation.com
Inquiries: dba@dbanetwork.com.au
SMSF industry update – legislation, policy and trends
SMSF online updates
Inquiries: 1800 203 123 or email enquiries@accurium.com.au
5 July 2024 12.00pm-1.30pm AEST
SMSF Compliance Day 2024
2 July 2024 Webinar 11.00am-12.00pm AEST
Technical Summit 24-25 July 2024 Hyatt Regency Sydney 161 Sussex Street
SMSF industry update – legislation, policy and trends 10 September 2024 Webinar 11.00am-12.00pm AEST
9 August 2024 12.00pm-1.30pm AEST 6 September 2024 12.00pm-1.30pm AEST
Heffron Inquiries: 1300 Heffron
2024 year-end accountants and auditors update
QLD 22 August 2024 Hotel Grand Chancellor Brisbane 23 Leichhardt Street, Spring Hill
NSW 27 August 2024 Rydges World Square 389 Pitt Street, Sydney
VIC
The Auditors Institute
25 July 2024 Webinar 11.30am-1.00pm AEST
29 August 2024 William Angliss Institute 555 La Trobe St, Melbourne
Inquiries: 02) 8315 7796
SMSF clinic
Managing an ageing SMSF client base
SMSF investment diversifications 2 July 2024 Webinar 1.00pm-2.00pm AEST
Threats to audit independence – the ongoing challenge 30 July 2024 Webinar 1.00pm-2.00pm AEST
Institute of Financial Professionals Australia Inquiries: 1800 203 123 or email info@ifpa.com.au
Valuations in SMSFs and the ATO’s focus
30 July 2024 Webinar 1.30pm-2.30pm AEST
Trustee quarterly webinar 13 August 2024 Webinar 1:00pm-2:00pm AEST
Super Intensive Day 2024 VIC 21 August 2024 Rendezvous Hotel Melbourne 328 Flinders Street
QLD 28 August 2024 Rydges South Bank 9 Glenelg Street, South Brisbane
NSW
4 July 2024 Webinar 12:30pm-1:30pm AEST
5 September Rydges World Square 389 Pitt Street, Sydney
When the ATO audits an SMSF auditor – what to expect and how to prepare
Quarterly technical webinar
16 July 2024 Webinar 12.30pm-1.30pm AEST
26 September Webinar 1.30pm-3.00pm AEST
28 August 2024 Webinar 12.00pm-1.15pm AEST
SMSF hot topics 10 September 2024 Webinar 2.00pm-3.00pm AEST
SMSF live Q&A 12 September 2024 Webinar 2.00pm-3.00pm AEST
SMSF Trustee Empowerment Day 2024 Inquiries: Vicky Zhao (02) 8973 3315 or email events@bmarkmedia.com.au
NSW 17 September 2024 Rydges Sydney Central 28 Albion Street, Surry Hills
VIC 19 September 2024 Melbourne Convention and Exhibition Centre 2 Clarendon Street, South Wharf
2024 super quarterly update 5 September 2024 Webinar 12.30pm-1.30pm AEST QUARTER II 2024 3