The Australian Labor Party’s mooted removal of franking credits may see an upsurge in members of self-managed superannuation funds (SMSFs), according to SMSF Alliance principal, David Busoli.
He said this was something that would need to be taken into account by SMSF advisers who might otherwise have regarded the 2018 Budget move to increase the number of people permitted to be members of an SMSF from four to six as a relative non-event.
“The move to six-member SMSFs, presumably from 1 July 2019, has been largely regarded as a ‘who cares’ moment by SMSF advisers given that four members are already permitted but almost all current SMSFs contain only one or two members,” Busoli said.
However, he said that if Labor won the next Federal Election and removed franking credit refunds he predicted there would be “quite an uptake of additional contributing SMSF members to enable excess franking credits to be applied to contribution tax”.
“An influx of additional (read younger) members will have repercussions for both SMSF investment strategies and fund control,” Busoli said. “Investment strategy considerations are fluid, but control issues need to be hardwired.”
He said that in these circumstances, choice of fund deed would be paramount alongside establishing voting powers and putting in place appropriate binding death nominations.
Increased regulatory reform and competitive pressures have meant most corporate funds are struggling to meet the scale required to survive, according to an industry professional.
The final draft of the $3 million super tax legislation remains unchanged and will include the taxing of unrealised gains and no indexation.
Amid Australians’ growing penchant for seamless digital experiences, an industry professional believes the most successful superannuation funds will be looking to leverage technology for their members in a number of ways.
The central bank has announced its latest rate decision amid stubborn inflation and increasing geopolitical tension.
Add new comment