Simplify transfer balance caps says SMSF Association
The Transfer Balance Cap regime needs to be simplified in the upcoming Federal Budget, according to the SMSF Association.
In a pre-Budget submission filed this week, the SMSF Association has argued that the regime has become to complicated because it has gone from having one cap to individual caps ranging from $1.6 million to $1.7 million.
“This is causing confusion and increases costs across the sector, SMSF Association chief executive, John Maroney said.
“Inevitably, mistakes will be made, leading to inadvertent breaches of the TBC. This situation is being compounded by the lack of access for financial advisers and SMSF administrators to the ATO reports that are needed to obtain an individual’s TBC. “
“In our opinion the use of a single cap will reduce costs, uncertainty and benefit all stakeholders – a position, we believe, is strongly supported across the SMSF sector,” Maroney said.
Elsewhere in its submission, the SMSF Association called for:
- Removing the registration cancellation fee that applies to approved SMSF auditors: This will provide equitable treatment with registered company auditors and removes a significant financial barrier to exit.
- Removing ambiguity regarding the application of the design and distribution obligations and target market determinations to SMSFs: We believe these provisions should not apply to the establishment of an SMSF, when adding a new member to an SMSF, or when starting a pension in an SMSF.
- Indexing key small business capital gains tax concession thresholds: Some thresholds have not been reviewed or updated for some time and this needs to be addressed.
- Protecting an individual’s unused Concessional Contributions Cap due to the late payment of prior years’ superannuation guarantee amounts: Under this measure the Commissioner of Taxation would be given the necessary powers to apply such amounts to the relevant year of income.
- Providing practical regulatory and compliance relief for minor breaches of the non-geared unit trust rules: Remediation is strictly limited to the winding up of the unit trust which can be costly and have a severe impact on the fund. Temporary measures adopted by the Commissioner of Taxation due to Covid-19 have demonstrated that such a framework with the right setting can function appropriately.