Clarity urged on related-party legislation
The superannuation industry needs to highlight the practical consequences of its intended legislation around related-party transactions with respect to self-managed superannuation funds (SMSFs), according to Institute of Chartered Accountants superannuation specialist Liz Westover.
Commenting on the fact that the submissions to Treasury on the new legislation for acquisitions and disposal of certain assets by SMSFs and related parties will close this week, Westover said it was important that the industry make clear the implications of the legislation to avoid creating unnecessary difficulties.
"Interestingly, superannuation legislation already contains a requirement for investments of super entities to be made and maintained on an arm's length basis, but the Cooper panel felt that these related-party transactions had the potential to be abused and specific provisions were warranted," Westover said.
"As with any piece of new legislation, it is important to consider any other possible implications that arise from its introduction," she said.
"With this new measure, issues may arise regarding practical implications of the ban on off-market transfers, such as the ability to transfer assets when there is a change of trustee, or dealing with small parcels of unmarketable shares within an SMSF."
Westover said the current draft of the legislation was silent on some of these scenarios, albeit that scope existed for them to be dealt with in the regulations.
"It is not likely the Government will have a change of heart in terms of the policy surrounding these new measures; however we can still highlight to them the practical issues as they finalise the wording of the legislation and regulations," she said.
"A clear analysis of new legislation is crucial to avoid causing more difficulties than the problems it may be trying to fix."
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