The SMSF Association has welcomed the Federal Budget reforms regarding residency rules for self-managed superannuation funds (SMSF) and an amnesty period for SMSF members stuck in legacy pensions to convert to more conventional style pension products.
The association’s chief executive, John Maroney, said another important reform was introducing measures to make it easier for older Australians to top up their retirement savings by removing the work test for non-concessional contributions for those aged 67 to 74 years.
“It means individuals who may have previously been unable to top up their retirement savings because they are no longer working may soon be able to do so. In addition, members aged 67 to 74 years will also be able to bring forward their non-concessional contributions in the same way that someone under the age of 65 can do,” he said.
The SMSF Association also welcomed the extension of the two-year safe harbour exemption to five years for residency rules as two years was too short in the context of modern work arrangements.
“Regarding residency rules, we argued in our submission that the existing two-year safe harbour exemption under the central management and control test is too short in the context of modern work arrangements, where executives and other staff are often expected to commit to an overseas placement for more than two years, and that this period should be increased to five years.
“The removal of the active member test significantly simplifies the residency rules for both SMSFs and small APRA funds,” Maroney said.
The lowering of the downsizer contributions eligibility age was also welcomed by the association.
“Contributing the allowable proceeds from the sale of a dwelling that qualifies as a main residence for the downsizer provisions has proven to be a popular strategy for individuals who are 65 or over,” Maroney said.
“Reducing the age at which downsizer contributions can be made from 65 to 60 provides more flexibility for members aged 60 to 64 to top up their retirement savings. This is particularly useful in a low contribution cap environment.
“We also welcome the Government’s decision to abolish the $450 monthly superannuation guarantee threshold which will benefit many lower paid employees, especially women in casual and part time employment.”