Monetary penalties imposed against self-managed superannuation funds (SMSFs) that fail to meet their legal compliance requirements should not be so high as to wipe them out, according to the Taxation Institute of Australia.
In a submission to the Cooper Review, the institute has recommended a review of the penalty regime applying to SMSFs, including the manner in which the top marginal tax rate is applied.
It said this regime should be changed so that the top marginal rate was applied only during the financial years that a fund remains non-complying.
"If an extra monetary penalty above this needs to be imposed, then the Taxation Institute has suggested that it be in line with having a deterrent effect, but not a punishment so large that it wipes out almost half of a taxpayer's retirement savings," the submission said.
The Institute said the monetary amount could be in the order of around $10,000 to $20,000 or based on a scale of the assets in the fund.
The research house has offered a silver lining after super fund returns saw the end of a five-month streak last month.
A survey of almost 6,000 fund members has identified weakening retirement confidence, particularly among those under 55 years of age, signalling an opportunity for super funds to better engage with members on their retirement journey.
The funds have confirmed the signing of a successor fund transfer deed, moving closer to creating a new $29 billion entity.
A number of measures, including super on Paid Parental Leave, funding to recover unpaid super, and frameworks to encourage investment in the energy transition, have been welcomed by the superannuation industry.
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