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Infrastructure for SMSFs to develop over time

The federal budget’s strong focus on future Australian infrastructure will help the SMSF sector access more opportunities in the asset class, however, these developments will not be felt immediately.

On budget night, Treasurer Joe Hockey announced a new $5 billion Northern Australia Infrastructure Facility, which he said was the first major step in the government’s plan to lay down strong foundations for Australia’s economic future.

“We will partner with the private sector and governments of Western Australia, the Northern Territory and Queensland to provide large concessional loans for the construction of ports, pipelines, electricity and water infrastructure that will open our northern frontier for business,” Hockey said.

The Treasurer said the infrastructure project was now under construction.

SMSF Association technical and policy senior manager Jordan George told selfmanagedsuper: “With the infrastructure opportunities for SMSFs, I don’t think we’re looking at it as a short-term budget solution – it’s something to be established over the medium term rather than hoping for anything from the budget tonight.

“So I think there’s some work in that area that the government can do and we’ll keep working with them to try to open up new avenues for SMSFs to invest in infrastructure.

“We’ll keep speaking to the government and working with them to find a solution to allow SMSFs to fund infrastructure.”

George added access to infrastructure as an asset class for SMSFs was more of a regulatory issue and needed to be opened up over time.

The SMSF Association revealed in April that it was lobbying government at several levels to allow SMSF trustees greater access to infrastructure investments, as opportunities were currently closed due to monopolies and economies of scale.

George also said budget night was quiet for superannuation and SMSFs, as expected.

“The government stuck to its pledge for no unexpected detrimental changes to super in its first term and we had the means testing of the age pension changes announced a week before the budget,” he said.
“All in all, it was relatively quiet for SMSF trustees.

“There was no announcement on limited recourse borrowing arrangements (LRBA) so we are still waiting for a government response to the Financial System Inquiry final report to see what their final policies are and what they intend for LRBAs.”

Institute of Public Accountants chief executive Andrew Conway said the announcement on further infrastructure activity issued a clear message about the broader investment pool.

“Investors should have great confidence in investing in infrastructure in Australia and it sends a very positive message to those who are contemplating whether this is a good market to invest in,” Conway said.

Further, no new tax on super was positive news for the industry, he said.

“I think the fact that tax on superannuation has been quarantined gives investors and the market a high degree of confidence,” he said.

“It sends a very clear message that whether it’s an SMSF or an industry fund, the reality is there will be no new taxes on super by this government and I think the market will respond positively.”

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