In-specie transfer ban for SMSFs 'more red tape'

The proposed Stronger Super ban on off-market related party transfers for self-managed superannuation funds (SMSFs) "goes against the grain of a simplified superannuation system," according to Hewison Private Wealth chief executive John Hewison.

The Government's proposal, contained in the recent Stronger Super changes, would see SMSFs prevented from completing in-specie asset transfers. Instead, DIY funds would have to carry out the transaction through a recognised market such as the Australian Securities Exchange, said Hewison.

"Using shares as an example, this means the investor must sell the asset on the share market, wait four days for trade to settle, transfer the cash into their super fund and rebuy the shares - taking up to a week to complete the transaction," Hewison said.

The Government's changes were a response to speculation under the Cooper Review that SMSFs were using off-market transactions to minimise capital gains tax by choosing a transfer date to coincide with a low price for the asset, he added.

Rather than adding further "red tape" to the system (and thereby defeating the purpose of Stronger Super) Hewison argued that a better solution would have been to tighten the timeframe for the lodgement of transfer documents.

"There is no logical reason to have singled out SMSFs, which are audited, when there is little evidence to suggest SMSFs are using in-specie transfers to avoid capital gains and one could argue that institutional investors would have a far greater impact in this regard," Hewison said.