Last week the federal government introduced the Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Bill 2021 into the lower house, beginning the process of legislating the superannuation announcements made in this year’s budget.
Just to remind you, some of the measures included in this bill are scrapping the need to pass a work test for individuals aged 67 to 74 wanting to make non-concessional contributions, allowing superannuants the ability to use the non-concessional contribution bring-forward rules up to the age of 75, and abolishing the need for SMSFs wholly in pension phase for the entire financial year with disregarded small fund assets to secure an actuarial certificate to calculate their exempt current pension income.
The speed at which these measures have been converted into draft legislation has been fairly breathtaking, but very welcome nonetheless.
As I’ve written in the past, all of these budget announcements were unanimously welcomed with open arms by the greater SMSF community and having associated draft legislation introduced to the parliament surely will be viewed no differently.
To this end, I think we’ll all be thanking our lucky stars there has not been an interminable wait to see these initiatives introduced to the houses of parliament as we experienced with the rule change increasing the maximum number of SMSF members from four to six. That move took close to three years to legislate.
Cynics will no doubt point to the fact the government is motivated to get these amendments through parliament speedily, seeing we are likely to be going to the polls in the first half of 2022 and it is just a move out of political advantage and expediency.
But to tell you the truth, I don’t really care what the driving factor is. If these are universally seen as good amendments, then the sooner they become law, the better.
If nothing else they will certainly make life easier for all SMSF trustees.
For example, there will no longer be a need to take into account the stepped process to basically rid the system of having to comply with a work test before being able to make non-concessional contributions up to age 74.
The first move in the process abolished the need to satisfy a work test for people aged 66 or younger. But with the 2021 budget announcement taking this age limit up to 74, there was always confusion as to what the current rules were. This confusion will now been eliminated once this bill passes both houses of parliament and receives royal assent.
Further, survey after survey tells us the time it takes to fulfil all of the administration functions associated with running an SMSF is a continual challenge for trustees. While no longer having to secure an actuarial certificate where a fund is fully in pension phase but has disregarded small fund assets may not amount to a significant cost saving, estimated by some to be between $150 and $250 a year, removing this procedural hurdle will be of infinitely more value in the time trustees save in running their fund.
Legislating these changes now will make the sector better off and will eliminate the risk of having them taken away should there be a change of government next year. That’s a good result.''