SMSFs have post-election relief, but current legislative changes could impact
Self-managed superannuation fund (SMSF) clients have felt a sense of relief since the election, but legislative changes may still impact them, according to Jenneke Mills, manager at MLC Technical Services.
Speaking at the SMSF Association Technical Day Series in Sydney yesterday, she said it was noticeable that SMSF clients were feeling positive again about superannuation, with certainty post-election.
“With a historic number of Opposition tax and super policies announced prior to the election, many investment and super plans were put on hold, pending the outcome,” Mills said.
“For SMSFs, we may see those who had put plans on hold to purchase certain assets in super using borrowings, proceeding with these arrangements, given that the proposal to abolish (Limited Recourse Borrowing Arrangements) LRBAs was a policy of the Opposition.”
“However because many of the major lenders have withdrawn from this market, we may see SMSFs increasingly relying on related party loans to do so. And this carries with it a whole range of potential issues and important considerations.”
Despite keeping the incumbent government, there were still proposed legislative changes that could affect the SMSF industry.
Key measures that had not been successfully passed before the election had been reintroduced in Parliament this week.
“The key one here for SMSFs will be the inclusion of the outstanding balance of a LRBA in a member’s Total Super Balance (TSB) in certain circumstances,” Mills said.
“TSB determines eligibility to make many types of contributions to super, so consideration of the longer-term super and even estate planning strategies and implications will be crucial before going ahead.”
“We may also see legislation passed to give effect to those key Budget 2019 measures - opening up even greater contribution opportunities to older Australians.”
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