Three-year audit cycle for complying SMSFs
From 1 July 2019, SMSFs with a history of good record-keeping and compliance (with clear audit reports and annual tax returns lodged on time) for three consecutive years, will be eligible for a three-year audit cycle rather than the current annual audit requirement.
This measure rewards consistently compliant SMSF trustees, by reducing red tape and annual administrative costs to the SMSF.
Increasing maximum number of SMSF members from 4 to 6
From 1 July 2019, the maximum number of allowable members in new and existing SMSFs will increase from four to six individuals.
This will provide greater flexibility for the joint management of retirement savings, particularly for larger families. However, greater consideration will be necessary for any imbalance of control over the SMSF, particularly ‘mum and dad’ funds where children could outvote parents regarding trustee decisions, or the estate planning issues arising for ‘blended families’.
Removing the work test for recent retirees
The ‘work test’ requires individuals over 65 to work a minimum 40 hours in a 30 consecutive day period during the financial year, to be eligible to make a voluntary contribution to super.
Effective 1 July 2019, an individual aged between 65 and 74 who has a superannuation balance of less than $300,000, can continue to make a voluntary super contribution in the first year that the individual fails to satisfy the work test criteria.
This measure will allow retirees a once-off exemption from the work test requirements, particularly in the year of transition from work to retirement.
Prevention of inadvertent concessional contributions breaches for eligible employees
From 1 July 2018, individuals whose income exceeds $263,157 and have multiple employers can elect to have wages from certain employers not subject to the superannuation guarantee (SG).
This measure will allow eligible individuals to avoid inadvertently breaching their $25,000 concessional contribution cap, as a consequence of receiving multiple compulsory SG contributions from various employers.
Eligible employees will have greater flexibility and control regarding their concessional contributions, by negotiating with their employers to receive any SG foregone as additional income (which would be taxed in the hands of the individual at marginal tax rates), and reducing the likelihood of excess contributions tax and interest charge liabilities.
Changes to better protect your super
The Government is introducing various changes from 1 July 2019 to protect superannuation, including:
- Introducing a 3% annual cap on fees charged on super accounts with less than $6,000;
- Requiring a transfer of inactive super accounts to be made to the ATO where the balance is less than $6,000 (this will reduce the likelihood of small super balances being degraded by fees);
- Insurance products within super will move from a default offering to an ‘opt-in’, for individuals who:
- Have a super balance of less than $6,000;
- Are less than 25 years of age; or
- Have inactive super accounts that do not receive any contributions for 13 months.
Improving the integrity of deductible super contributions
From 1 July 2018, resources will be provided to the ATO to improve the compliance process of identifying individuals who claim personal tax deductions for super contributions, but fail to submit the ‘notice of intent’ to their super fund.
The changes to super contributions from 1 July 2017 have highlighted the lack of compliance in submitting the ‘notice of intent’ by individuals, which is costing the Government in lost revenue.