Productivity and Royal Commissions could look at SMSFs

While the self-managed superannuation fund (SMSF) industry is not in for a year of as much policy change as 2016, advisers still need to be prepared for a big 2018, according to SMSF Association head of policy, Jordan George.

George told SMSF Association Conference delegates that the “implementation of [2016-17 Budget] measures took a lot of work last year, and will probably again this year.” He also said that there were multiple areas where SMSFs could see change in 2018.

In addition to smaller changes, he pointed to the release of the Productivity Commission’s Review of Super report, transfer balance reporting rules taking effect and, reflecting a consistent theme of the Conference, the Royal Commission and the Financial Adviser Standards and Ethics Authority’s (FASEA’s) education reforms.

While the Productivity Commission’s report would most likely focus on large-fund issues, such as choice of fund for employees, George said that SMSFs could still be subject to recommendations. The Commission looked at low balances of funds and their efficiency, under which SMSFs could come under consideration.

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George also reiterated that the Association was happy with the compromise the Australian Taxation Office (ATO) made on transfer balance reporting. Following industry pressure, the ATO lowered reporting requirements to monthly to quarterly and would only impose them on funds with balances over $1 million.

He did acknowledge, however, that there is a benefit to SMSFs reporting to the ATO for ////. He said that the Association would be looking at how data and digital platforms could be used to make frequent reporting easier.

George said that, while SMSFs were not within the Royal Commission’s terms of reference, they could still come under its remit. Some of the off-the-shelf products offered to SMSFs can be “a bit shonky,” for example, especially when SMSF establishment is included, which is an area that has already been highlighted as of concern to the Commission.

George also said that SMSFs would need to “keep an eye” on large funds being investigated by the Royal Commission to ensure that they were not deflecting attention to SMSFs.

Regarding education, George called on FASEA to put out more comprehensive guidelines on its planned reforms to adviser education standards. He also reflected the concerns of the wider financial advice industry in saying that involving universities in deciding the new standards was akin to leaving “a fox in charge of a henhouse.”