Super System Review: Preliminary Report on SMSFs
The Super System Review has released its preliminary report, Self-Managed Super Solutions, which contains a host of recommendations. While the Government has not responded to the recommendations, if implemented, they will impact on the SMSF landscape.
The report makes the following key recommendations:
- Exotic assets prohibited - Investments in collectables and personal use assets should be prohibited, such as paintings, jewellery, antiques, wine, exotic cars and yachts.
- In-house assets prohibited - SMSFs should be prohibited from any in-house assets. (In brief, an in-house asset is an investment in a related party of the fund/
- Leverage and instalment warrants - A review of the borrowing exception (ie instalment warrants) should be carried out in two years to ensure that borrowing has not become a significant focus of SMSFs.
- Annual member disclosure - The corporations legislation should be amended to ensure SMSFs' members are provided with key information annually.
- Illegal early release - Existing tax laws should be amended so that amounts illegally early released are taxed at the superannuation non-complying tax rate (currently 46.5%) rather than an individual's marginal tax rate.
- Binding SMSF rulings - The Tax Office should be given the power to issue binding rulings in relation to SMSFs.
