This is not an exhaustive list of all budget measures impacting SMSFs and until legislation is passed by parliament they are subject to change. It does not take into account your personal needs, objectives or circumstances.
Work test exemption for recent retirees
Currently, the work test restricts voluntary super contributions to those individuals aged 65-74 who work a minimum of 40 hours in any 30 consecutive day period in the financial year. From 1 July 2019, individuals aged 65-74 with total super balances below $300,000 will be exempt from the work test for voluntary super contributions in the first year that they do not meet the work test, thereby allowing recent retirees more time to implement their retirement plan.
Inadvertent concessional cap breaches
From 1 July 2018, individuals whose income exceeds $263,157 and have multiple employers can opt out of Superannuation Guarantee (SG) contributions on their wages from certain employers, and may instead receive additional income that will be taxed at marginal tax rates. This measure will prevent certain individuals unintentionally breaching their $25,000 annual concessional contributions cap as a result of multiple compulsory SG contributions.
SMSF member limit lifted from 4 to 6
The maximum number of members allowed in an SMSF is proposed to increase from 4 to 6 from 1 July 2019. This measure will provide further flexibility in how SMSFs can be structured and will also provide more opportunities for taxation and estate planning. Currently, family groups may need to have multiple SMSFs to accommodate more than 4 members, this measure will allow a single SMSF for the group, bringing the benefits of reduced costs and greater scale. It may also support the intergenerational transfer of assets.
Three year audit cycle
From 1 July 2019, the annual audit requirement for SMSFs will change to a 3 year cycle where the SMSF has a history of good record keeping and compliance including: – clear audit reports; and – SMSF annual returns lodged on time.
Improved integrity of deductions for personal contributions
Currently, some individuals receive deductions on their personal super contributions but do not submit a ‘notice of intent’ (NOI) to their SMSF, despite being required to do so. This results in their SMSFs not applying the appropriate 15% tax to their contribution. As the contribution has been deducted from the individual’s income, and no tax is paid on the contribution, no tax is paid at all. From 1 July 2018, the ATO will alert individuals in their personal tax returns regarding NOI requirements with a tick box to ensure they have complied. Deductions will be denied if they fail to comply with NOI requirements.
SuperStream to be extended to SMSF rollovers
SMSFs currently only receive employer contributions and the respective data via SuperStream. Although not in the Federal Budget, the Government recently announced that SuperStream will be extended to rollovers between SMSFs and APRA-regulated funds and they will be required to be processed within three days (currently, rollovers via SuperStream can only occur between APRA-regulated funds). Rollout is expected late 2019.
If you would like to understand how 2018/19 Federal Budget will impact your SMSF, please feel free to contact us on 03 9557 3138 or firstname.lastname@example.org