The SMSF Association has placed simplification of the Transfer Balance Caps (TBSCs) at the top of its Federal Budget recommendations, saying the introduction of indexation has added greater complexity to the superannuation system.
The TBC was a limit on how much superannuation can be transferred from an accumulation superannuation account to a tax-free ‘retirement phase’ account.
SMSF Association chief executive, John Maroney said: “As our submission points out, the system has shifted from having a single cap to individual caps ranging from $1.6 to $1.7 million.
“This is causing confusion and increased costs across the sector. Inevitably, mistakes will be made, leading to inadvertent breaches of the TBC.”
He said the situation was being compounded by the lack of access for financial advisers and self-managed super fund administrators to the Australian Taxation Office reports that were needed to obtain an individual’s TBC.
“In our opinion the use of a single cap will reduce costs, uncertainty and benefit all stakeholders – a position, we believe, is strongly supported across the SMSF sector,” said Maroney.
Other key recommendations made by the SMSF Association included:
• Reducing the number of Total Super Balance (TSB) thresholds as their introduction “made it increasingly difficult for individuals to understand what their options are”.
• Removing the registration cancellation fee that applies to approved SMSF auditors as it would “provide equitable treatment with registered company auditors and removes a significant financial barrier to exit”.
• Removing ambiguity regarding the application of the design and distribution obligations and target market determinations to SMSFs.
• Indexing key small business capital gains tax concession thresholds. “Some thresholds have not been reviewed or updated for some time and this needs to be addressed.”
• Protecting an individual’s unused Concessional Contributions Cap due to the late payment of prior years’ superannuation guarantee amounts.
• Providing practical regulatory and compliance relief for minor breaches of the non-geared unit trust rules.
The Association also took the opportunity in its submission to urge the Federal Government to enact the Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Bill 2021 currently before Parliament.
Maroney said: “This Bill contains important legislative reform for our sector, as well as the broader superannuation system, with the measures intended to apply from 1 July, 2022.
“This includes lowering the age at which downsizer contributions can be made from 65 to 60; removing the work test for members aged less than 75 and extending the bring-forward rule for non-concessional contributions; and increasing the first home saver release amount from $30,000 to $50,000.”
