The federal government’s response to the Cooper review’s recommendations for self-managed superannuation funds (SMSFs) has been seen as a welcome, common sense approach to the regulation of the sector by some of the industry authorities.
The major announcements from Minister for Superannuation Bill Shorten included the retention of the existing in-house assets rule, the implementation of a sliding scale of administrative penalties regarding non-compliance, having trustees bear the liability of non-compliance penalties, the establishment of a list of registered SMSF auditors supervised by ASIC, and maintaining the existing standards of auditor independence.
The Self-Managed Super Funds Professionals’ Association of Australia (SPAA) was quick to acknowledge the decision on in-house assets.
“We are particularly pleased the federal government has listened to our feedback and has decided not to impose additional restrictions on where or what SMSFs can invest in,” SPAA chair Sharyn Long said.
“We particularly note the government’s comment that there is no evidence that current in-house asset investment rules have caused any ‘detriment’ to SMSFs,” she added.
The Institute of Chartered Accountants in Australia (ICAA) echoed these sentiments on this topic.
“We didn’t believe that reducing the in-house assets from 5 per cent to 0 per cent would change trustee behaviour given that when people had previously been breaching this rule they were doing it quite significantly,” ICAA head of superannuation Liz Westover said.
“I do believe the ATO (Australian Taxation Office) now having the ability to impose greater penalties on trustees individually will have a much better effect on curbing those types of behaviours,” she said.
The ICAA was also pleased the government recognised the current situation in regard to auditor independence and supported the auditor register, but questioned the need for ASIC’s involvement.
“We accept there needs to be a register of auditors but we did believe the ATO was best placed to do that given we could build on systems that were already in place,” Westover said.
“What we did like about the minister’s response was he acknowledged there are these auditor independence standards in place and we need to take a very close look at those before we implement new ones,” she explained.
The Small Independent Superannuation Funds Association (SISFA) was pleased, specifically with the introduction of the sliding scale of penalties.
“Basically, it’s consistent with what we put in our submission, so that makes a lot of sense to us. The current regime was an all or nothing type of scenario, so we’ll be interested to see what the detail is but the concept is very much welcomed,” SISFA chair Michael Lorimer said.
While recognising it wasn’t a huge issue, both the ICAA and SISFA were slightly disappointed the ATO was not given the power to issue binding rulings, as they felt it would have established greater operational clarity for the sector.
