The Stronger Super regulations banning off-market asset transfers for self-managed superannuation funds (SMSF) are unfairly biased against this segment of the retirement savings market, according to Hewison Private Wealth.
Under the new rules, members of SMSFs are no longer permitted to transfer assets into or out of the fund in lieu of cash-in transactions with fund members or their related parties.
Instead, any transactions involving the transfer of SMSF assets will now have to be conducted through a recognised market.
"The issue is that under the new reforms, SMSF investors have restrictions applied, but institutional and industry superannuation funds, which also use these transactions, are exempt," Hewison Private Wealth chief executive John Hewison said.
"In addition, the ban will most likely impose additional brokerage costs on SMSF members and exposes their assets to greater risk, especially given current market volatility."
Hewison cited the elimination of perceived tax advantages being enjoyed by SMSFs through these transactions as the prime motivation for the change.
"[Financial Services and Superannuation] Minister [Bill] Shorten has said the motive for the change was to ensure 'fraudulent activity is curbed'. If this is a concern, then it should apply equally to any entity, including individuals, trusts and companies that also commonly use this form of transaction, for instance, in lending shares to short sellers, which it could be argued is market manipulation," he said.
"There is no logical reason to have singled out SMSFs, which are audited, when there is little evidence to suggest SMSFs are using in-specie transfers to avoid capital gains and one could argue that institutional investors would have a far greater impact in this regard."
He suggested tighter timing regarding the lodgment of transfer documents might have been a better solution to the government's concern over this practice.
