Following the recent release of Self-Managed Super Solutions we now have the Panel's preliminary recommendations on self-managed superannuation funds (SMSFs).
These proposed changes to SMSFs will not affect many funds. The significant amount of money being managed by SMSFs means that this kind of review will occur again in the future. However, Trustees who satisfy the Sole Purpose Test(1.) and support and assist with the compliance of their fund will have nothing to fear.
Overall, the Cooper Review seems to be focused on making SMSFs work better and not bowing too much to the self interest of the institutional and industry superannuation industry that unfortunately see SMSF as a threat to their business.
Review Chair, Jeremy Cooper acknowledged that, SMSFs are here to stay, but the focus needs to be on investing for retirement savings,” rather than related party transactions, collectables and leverage.”
He also said that “ the vast majority of SMSFs will not be affected by these particular proposals. We think this will be treated as good news in the SMSF sector."
Cooper said "Our preliminary recommendations are designed to improve the safety and integrity of SMSFs, while continuing to allow a high degree of self-determination and flexibility for trustees taking responsibility for their own retirement outcomes."
The Key preliminary recommendations include:
- Prohibiting investment in collectables and personal-use assets (such as artworks, wine collections, exotic cars and yachts)
- Strengthening the competence and independence of approved auditors
- An online SMSF resource centre to help SMSF trustees build skills and make better decisions
- Making the ATO's penalty regime more flexible to enable more effective and equitable regulation
- Tightening the SMSF registration process, including the introduction of member identity requirements, to reduce instances of fraud and illegal early release schemes
- Reducing the potential to benefit illegally from related party transactions by prohibiting the acquisition of in-house assets and imposing restrictions on the way in which an SMSF can transact with related parties.
1. The sole purpose test requires the trustee to invest with the sole purpose of providing retirement incomes for the members.
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