Cooper, at last!

8 July 2010

The report of the Super System Review was handed to the Federal Government on 30 June 2010 and on Monday, 5 July the Report was released by the Government.

The Government has not provided its policy responses to the Report.  Given recent events, it may be some time before the Government does provide its policy responses.

However, in few words the main proposals – so far as they apply to self managed superannuation funds – are:

  • No change to the 4-member rule
  • ATO should have the power to issue administrative penalties to miscreant trustees – affectionately known as “speeding tickets”
  • ATO should have the power to force miscreant trustees to undertake compulsory rectification actions
  • There should be a review of super gearing in 2012 to ensure that gearing is not and is not becoming a significant focus of super funds
  • The 5% in-house assets exception should be removed and no new in-house asset investments permitted
  • SMSFs should be prohibited from investing in collectibles (art, antiques, stamps, coins) and personal use assets (antique sowing machines, cars, first generation computers and slide rules)
  • The business real property exception should remain (ie SMSFs will be able to continue to acquire business real property and lease business real property to fund members)
  • SMSFs with existing in-house investments should be provided with a 5-year transition period to either convert their status to an APRA regulated fund or to dispose of their in-house investments
  • All SMSF assets should be valued at net market value
  • Proof of identity checks should be required for all new SMSF members
  • Rules should be introduced as to the naming of SMSFs – to avoid names which could cause confusion with retail or industry funds
  • The anti-money laundering legislation should be amended to treat SMSF rollovers as a designated service under that legislation (requiring proof of identity for rollovers)
  • The SIS Act should be amended so that anything permitted by the SIS Act or the Tax Act is likewise permitted by SMSF trust deeds
  • In formulating investment strategies, SMSF trustees should be required to consider life and TPD insurance for SMSF members.

 

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