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More positive announcements on the superannuation front

Kym Bailey

Technical Services Manager, JB Were

Member of The Tax Institute’s Superannuation Technical Committee 

Note: Views expressed by Kim Bailey were her own and not representative of JB Were.

Transcript, 4 April 2019: Post-Budget comments regarding Superannuation changes, Part 2 

KYM BAILEY:  So from 1 July 2020, trustees of super funds will be able to elect whether they use the proportionate or the segregated method for the calculation of ECPI. Now this is great. This is back to what I guess what we were used to in past years. 

And the big one for self-managed super funds, is that if they otherwise have got what they call disregarded small fund assets, then they will no longer have to obtain an actuarial certificate to calculate ECPI if they only have pension phase members in the fund. 

So, this will be great. It’s not a ‘nice to have’ announcement. It should never have been the case, so let’s hope this one gets through.   

The third measure I wanted to talk about today, which was also positive, is the announcement that super funds merging will be entitled to a permanent CGT relief, which had a sunset date under the current settings. 

So, what that means is that the industry can look to consolidate without being limited by the tax position of the current fund. 

It’s not hard to see that it’s a disadvantage to current fund members to say, ‘we’re merging with another fund, sorry the portfolio’s positions aren’t allowed to be taken with you’. 

So, it was a good measure when it was introduced, and the fact that it’s going to be a permanent feature I think will just remove that in decision making for funds. 

It’s important to note, it never applied to self-managed super funds unfortunately, so we don’t have that capacity in the smaller fund end. 

It’s important to note that these are only announcements, we haven’t got legislation, we may not even have a Government to implement them – we’ve got a lot of uncertainties this time around. 

However, what was announced has been positive for super. There is nothing to do now. There is no call to action before 30 June. There is nothing we can do before 30 June. 

I think it is just important to be on the front foot with clients so that they’re completely aware of where the thinking is. 

I think one of the potential negatives that might have come from the Budget is we’ve actually removed that magic sort of aura around the age 65. And you can sort of see that if 65 is no longer sacrosanct, will they then come forth and say well actually unconditional access to super no longer comes about at 65, they might just lift that up as well. 

So, there is sometimes a sting in the tail – but at the moment – it’s all positive.

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