The ongoing uncertainty over the accountant exemption applying to self-managed super funds (SMSFs) as well as a number of rules that simply don’t make sense are two areas that need regulatory improvement, an industry expert has said.
Speaking at a SMSF round table discussion in Sydney yesterday, Self Managed Super Fund Professionals’ Association of Australia (SPAA) director Peter Hogan said that the current but soon to be phased out exemption allowing accountants to recommend a client start up a SMSF wasn’t working because it was creating frustration for both the accountant and the client when the accountant was then not allowed to give further advice on the running of the fund.
Hogan suggested a partial licence, rather than a full Australian Financial Services Licence (AFSL), that would allow accountants to give superannuation advice.
“Most accountants who aren’t already licensed aren’t interested in giving product advice, so don’t give them a licence where they have to be up-skilled in product but give them a licence where they can talk about superannuation, consolidation of super accounts, all that basic stuff,” Hogan said.
It was a relief that the Government opted not to employ the Cooper Review’s recommendation that collectibles be banned in SMSFs, which would have been the first time a particular type of investment was banned in a super fund, Hogan said, but there were still plenty of rules that applied to SMSFs that “don’t make a lot of sense.”
Many rules were a response to a particular activity or behaviour that a Government or regulator did not like and there was no logical flow from one rule to another, he said.
In-house asset rules were a specific set of rules targeting a particular behaviour and the acquisition of assets from related parties is a different set of rules targeting a different behaviour, and it’s hard for trustees to understand why, if they pay market value for an asset, there could then be a problem.
“Somewhere along the line a regulator has had a problem with a holiday house being in a super fund, never staying in it, whether they pay market rates or not — that doesn’t make sense to the ordinary trustee, but it’s there and that’s the rule,” Hogan said.
“So it’s easy for trustees, if they don’t take advice, to inadvertently fall over these rules and break them.”
