News in brief

SMSFA calls for limit simplification

The current confusion surrounding transfer balance caps (TBC) can be solved by aligning those of superannuation fund members with the general TBC, according to the SMSF Association (SMSFA), which has also called on the government to reduce the number of total super balance (TSB) thresholds.

The SMSFA made the calls as part of its 2022/23 budget submission to Treasury, stating the simplification of TBCs was its primary recommendation to government after the introduction of indexation on 1 July 2021 added greater complexity to the superannuation system.

The submission stated that aligning superannuants’ TBC with the general TBC would provide certainty while reducing costs for funds and members and simplifying the administration required by the ATO, financial advisers, SMSF administrators and fund members.

In calling for the simplification of TSB limits, the SMSFA submission recommended the removal of the $1 million TSB threshold for transfer balance account reporting, the removal of the $1.48 million and $1.59 million TSB bring-forward non-concessional contribution thresholds and aligning the disregarded small fund assets threshold to the general TBC.

SMSF members most satisfied

SMSF have been ranked the highest for member satisfaction compared to all other types of funds in 2021, according to statistics released by Roy Morgan.

The market research company’s latest “Superannuation Satisfaction Report” revealed SMSF customer satisfaction significantly increased in the 12 months to December 2021.

“Despite [satisfaction levels rising for all fund categories] it is self-managed super funds which still lead the way with a customer satisfaction rating of 80.1 per cent, up 8.5 percentage points on a year ago, ahead of public sector funds just behind in second place on 77.7 per cent, up 3.9 percentage points,” Roy Morgan chief executive Michele Levine said.

The report, which was based on responses from 20,900 Australians with superannuation, noted the stock market’s strong performance over the past 18 months had supported the growth of customer satisfaction regarding industry funds, which reached a new high in 2021.

The period covered by the report was the six months from July 2021 to December 2021, which had been impacted by extended lockdowns across the nation and significant financial support schemes being implemented.

New insolvency laws affect sector

Following the federal government’s decision to change the insolvency legislation framework, the ATO has warned SMSFs with a corporate trustee may be disqualified where they have been involved in an insolvency event.

In a website update, the regulator noted the government’s changes included a new debt restructuring process and a simplified liquidation process for eligible incorporated small businesses through the appointment of a restructuring practitioner.

These changes also led to amendments to the Superannuation Industry (Supervision) Act, which commenced from 8 December 2021, and the creation of a new category of disqualified persons, which could impact SMSFs with a corporate trustee.

“This new category applies when a restructuring practitioner is appointed in an insolvency event. This will trigger the disqualification of a corporate trustee of a superannuation entity, including an SMSF, from managing a superannuation entity,” the ATO stated.

“If your SMSF has a corporate trustee, and a restructuring practitioner is appointed, the company will no longer be able to act as the corporate trustee as it is disqualified. You need to notify us of the disqualification as soon as practicable.”

Class CEO departs

Class has announced chief executive Andrew Russell has decided to depart his position on 16 February, the same date the scheme of arrangement for Hub24’s acquisition of the SMSF administration provider will be implemented.

According to Class, Russell and the boards of the two companies agreed that with Class becoming a part of Hub24 following its acquisition, the time was right for him to step down.

Russell has been in the role since May 2019 and will act as an adviser to Hub24 until 31 March, while Hub24 director of strategic development Jason Entwistle has been appointed interim chief executive and managing director of Class, reporting to Hub24 chief executive Andrew Alcock.

Class chairman Matthew Quinn thanked Russell for his work at Class, noting he was a “talented chief executive and a transformational leader”.

Russell said it had been a privilege to work for a driven organisation, which is expected to grow following Hub24’s acquisition.

Hub24’s plans to purchase Class, first announced under a scheme of arrangement in October 2021, received approval in the Supreme Court of New South Wales on 4 February 2021, allowing the group to acquire all Class shares.

NALE review push

Eleven industry bodies have called on the federal government to commit to a review of the non-arm’slength expenditure (NALE) rules and addressing the potential for general expenses to taint all of a superannuation fund’s income.

The recommendation was made as part of a submission to Superannuation, Financial Services and the Digital Economy Minister Jane Hume in September 2021, recently released by Chartered Accountants Australia and New Zealand (CAANZ)

The joint bodies, including the SMSF Association, Self-managed Independent Superannuation Funds Association and Association of Superannuation Funds of Australia, stated the NALE rules and the ATO’s interpretation of them would have harmful consequences that were not intended and should not be left unaddressed.

“While the joint bodies have a number of issues with the reach of these provisions, our overarching concern is that the ATO’s interpretation of the law means that rather than merely addressing the mischief at which the government policy was directed, the rules could result in unwarranted significant and long-term detriment to fund members and could operate in conflict with a range of trustee obligations such as the best financial interests duty rule in the Superannuation Industry (Supervision) Act,” the submission from the 11 industry bodies said.

“Given the significant impact these rules may have on retirement savings, the joint bodies ask that the government make an announcement that they will review the NALI rules in section 295550 of the Income Tax Assessment Act 1997 and encourage the ATO to provide further administrative relief until this review and relevant amendments to the legislation are enacted.”

Crypto scams target SMSFs

Scammers are continuing to target SMSFs, with the Australian Securities and Investments Commission (ASIC) warning of an escalation in marketing about crypto-assets recommending the creation an SMSF to invest in ‘high-return’ portfolios.

The corporate watchdog noted an increase in the number of advertisements suggesting Australians switch from their retail and industry superannuation funds to an SMSF to invest in crypto-assets or cryptocurrencies.

ASIC has advised trustees to be cautious regarding social media advertisements, online contacts promoting an investment opportunity, cold calls, text messages or emails recommending a super fund be transferred to an SMSF or investing in cryptoassets via an SMSF.

It noted superannuation was an “attractive target” for scammers and crypto-assets were a high-risk and speculative investment, and advised “it is best practice to seek advice from a licensed financial adviser before agreeing to transfer superannuation out of a regulated fund into an SMSF”. The regulator added anyone who was an SMSF trustee would be responsible for any investment decisions and should seek advice and be aware of their obligations when investing.

Dixon in voluntary administration

Dixon Advisory and Superannuation Services (DASS) has entered voluntary administration, appointing PwC partners Stephen Longley and Craig Crosbie to conduct the process.

DASS, a wholly owned subsidiary of E&P Financial Group (EP1), cited the possibility of becoming insolvent in the future as the reasoning behind the decision.

The move was made amid fears of actual and potential liabilities the entity is facing stemming from a client class action being led by Piper and Alderman and Shine Lawyers, claims against DASS being determined by the Australian Financial Complaints Authority and an agreement made with the Australian Securities and Investments Commission to pay a $7.2 million penalty and $1 million in legal fees.

The appointment of voluntary administrators was made with a view to facilitate the prompt transfer of DASS clients to a replacement service provider of the client’s choice as seamlessly as possible, and the preparation of a deed of company agreement that will provide for the comprehensive settlement of all DASS and related claims in an equitable manner for all clients and creditors.

SMSFA conference postponed

The SMSF Association (SMSFA) has confirmed its national conference for 2022 has been pushed back to late April due to the current rise in COVID-19 cases across Australia resulting from the Omicron variant of the virus.

SMSFA chief executive John Maroney said the industry body had been monitoring coronavirus-related developments as they relate to the safe operation of the conference but also the safe travel of all attendees to and from Adelaide, where the conference will be held. “With most states and territories including South Australia currently in the midst of escalating COVID-19 cases, we have decided to postpone our 2022 National Conference until April, [from] Wednesday 20 April to Friday 22 April 2022, immediately after the Easter break,” Maroney said.

“We know most of our conference delegates are eager to return to face-to-face events and we are committed to presenting a national conference of the highest calibre.

“Once the current wave of Omicron infections has passed, we expect that by April we will be able to gather together, in a controlled and safe manner, to enjoy this premium SMSF sector conference.”