On 22 October 2012, Federal Treasurer Wayne Swan released the Government’s 2012/2013 Mid-year Economic and Fiscal Outlook (MYEFO). The report contained several measures affecting the superannuation accounts of Australians, including those who run self-managed super funds. A summary of these measures is set out below.
The main superannuation changes announced in the 2012/2013 MYEFO are:
- Pension earnings remain tax-free after the death of the pension recipient, when there is no reversionary beneficiary. This announcement partly neutralises an ATO draft ruling released in July 2011 (see SuperGuide article, Good news! Pension earnings remain tax-free after death).
- Another increase in the SMSF supervisory levy paid to ATO, and SMSF trustees will be forced to pay the ATO levy earlier (see SuperGuide article, Another SMSF whack! ATO levy jumps to $259).
- Changes to how lost member accounts are handled, including increasing the account balance limit for automatic transfer to ATO, changing the definition of an ‘inactive’ account to 12 months rather than 5 years, and, from 1 July 2013, paying ‘interest’ on lost super held by the ATO (see SuperGuide article, Lost super makes money for everyone).
- From 1 July 2013, the Federal Government is abolishing the member protection rules which protected super account balances of less than $1000, from being rapidly eroded by fees charged by super funds. No alternative fee protection measure has been put in place for small account balances, which is a major concern for young people starting out with small accounts, or for those who may have multiple part-time jobs.
- Superannuation Centre for Consumers. The Government has provided ‘seed funding’ for an investment fund, giving $10 million over 3 years for a consumer advocacy centre, subject to the industry also kicking in $10 million. The SCC will be financed from the earnings derived from the $20 million (see SuperGuide article, Superannuation Consumer Centre: A great idea, but…).
- Financial advisers who provide tax advice must comply with the tax agents regime, effective from 1 July 2013, although they will have a 3-year transition period to get used to the idea.
- The existing licensing exemption for accountants (in relation to SMSFs) is to be extended until 30 June 2016 (rather than June 2014) to give the industry time to undertake training or processes required to meet the new rules.
- Fund merger relief (relates to capital gains tax relief when large super funds merge), backdating the tax relief to October 2011. Also, when large super funds merge, individuals will still retain the right to claim a personal deduction in the new fund (if eligible in old fund)
- Specific loss relief to Military Superannuation Benefits Fund, to allow transfer of realised tax losses to main government super scheme.
- APRA levy imposed on large super funds each year will be reduced due to the savings in the ATO’s administration of SuperStream.