SPAA welcomes rejection of additional investment restrictions for SMSFs

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SPAA is pleased SMSFs retain freedom to invest with no changes to in-house asset rules and welcomes consideration of a restricted licence to replace the accountants’ exemption.

The Self-Managed Super Fund Professionals’ Association of Australia (SPAA) has today welcomed the Federal Government’s response to the Cooper Review recommendations on the $409 billion self-managed superannuation sector which include no additional investment restrictions for SMSFs, higher standards for SMSF advisers and consideration of a ‘restricted licence’ arrangement for accountants who provide limited superannuation advice.

“The minimal Government measures announced in response to the Cooper Review for SMSFs are further confirmation that the sector is performing well and does not need significant intervention or overhaul,” said Sharyn Long, SPAA Chairman. “SPAA believes SMSF investments should be free from government intervention as far as possible.”

“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,” Ms 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.”

The Cooper Review recommended that the 5% in-house asset limit be removed so that no IHA investments be permitted and that SMSFs with existing IHA assets be given five years to exit them. An early version of the Cooper report also recommended that artwork and collectables be banned as investments in SMSFs too, but in July the Government endorsed a set of best practice guidelines for collectables in SMSFs developed by SPAA and the Australian Artists Association and this has been retained.

Ms Long said SPAA endorsed the ASIC registration requirement for SMSF auditors, but said more information was needed on the detail, in particular on the proposal that the Australian Tax Office police SMSF auditors. “However, SPAA is very pleased the Government has announced a review of the Cooper Review recommendation on SMSF auditor independence, as we believe it is unworkable in its current form.”

“We note that the Government has referred the accountants’ exemption issue to the Future of Financial Advice reform process, but its response suggests the door remains open for the use of a restricted licence
for accountants who provide non-investment advice on superannuation,” Ms Long said. She noted that the Cooper Review had recommended a full Australian Financial Services Licence replace the
accountants’ exemption.

She said SPAA supported the Cooper and Government move to develop an SMSF specialist knowledge component of advice standard RG146 because there was a need to improve this basic standard for superannuation advice.

“We have argued in our Cooper submissions that the SPAA Specialist Auditor (SSAud) and SPAA Specialist Advisor (SSA) accreditations be used as the basis for improved advice standards in the SMSF
sector,” she said.

SPAA has also been assisting the ATO on measures to reduce instances of fraud and illegal early access and endorses the Government’s move to require verification of identity and other checks.

On issues of concern, Ms Long noted that the Government had rejected a Cooper recommendation to allow the ATO to issue binding rulings in relation to SMSFs.

“We are disappointed the Government response to Cooper has ruled out the use of Australian Tax Office binding rulings in relation to SMSFs, as we believe such rulings can provide clarity and certainty for SMSF
trustees,” said Ms Long.

“We look forward to participating in the Government’s consultative group and sub-groups on the implementation of the Cooper reforms that it has adopted.”

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