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Cooper's SMSF asset transfer rules unfair: Hewison
Cooper Review recommendations that assets being transferred into a self-managed super fund (SMSF) be sold first then re-bought by the SMSF unless no market for the assets exists are unfair and inconsistent, according to Chris Morcom, director and adviser at Hewison Private Wealth.
"If you have to sell assets to transfer them into super, you're going to have a situation where you sell them on the market, wait for them to settle, then you've got to transfer the cash into the super fund - it may be a week later you're buying the cash in the super fund, anything could happen," he said.
If an investor with a $450,000 contribution cap was looking to transfer the entire amount into a SMSF in the form of equities, that would create a substantial amount of risk that many investors would not be willing to take.
"It's unfair to limit [SMSFs] to that sort of thing when there's these black pools operating that large organisations can use to facilitate transactions of market related securities without the market knowing what's going on - it's outside of market regulation almost. It's our view that this needs some more attention," Morcom said.
It was also nonsensical that for other assets where no underlying market existed, the recommendation was to allow those to be transferred provided they were valued by an appropriate valuer, he said.
"A commercial property [has] no underlying market but if you get it valued by a valuer you can transfer it in. There are different rules for different assets and that doesn't seem to make sense," Morcom said.
Morcom agreed the current rules needed to be changed as the transfer window was too large, meaning investors had too much discretion about when they chose to complete the transfer. Theoretically, they could backdate a transfer to when a share price was lower, minimising capital gains tax.
He suggested a system of electronic transfers that transferred the assets instantly at current market price could solve the problem, possibly facilitated through the registries or the Australian Securities Exchange.
AUTHOR
Mike Taylor
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