The Self Managed Super Fund Professionals’ Association has today predicted a year of clarity for the SMSF sector on issues such as limited recourse borrowing, replacement of the accountants’ exemption and new rules for holding collectables in SMSFs. In new issues, SPAA expects greater Australian Tax Office focus on SMSFs which are paying pensions, while SPAA intends to look for ways to help SMSFs better access wholesale investments.

In a keynote address to the SPAA National Conference in Brisbane today, on key legislative and technical issues impacting on the SMSF sector, SPAA National Technical Director Peter Burgess said SPAA was also optimistic about a resolution to the excess contributions tax issue this year.

“We see 2011 as a year of consolidation following the Cooper Review and consultations on the Future of Financial Advice (FoFA) reforms,” Mr Burgess said.

“We look forward to clarification of the limited recourse borrowing rules, in particular, to a softening in the ATO’s interpretation of them. Currently, SMSFs can only borrow against a ‘single acquirable asset’ and asset improvements are banned. The Queensland floods highlighted the inflexibility of these rules and, unless changes are made to them, or to the ATO’s interpretation, it is difficult to see many SMSFs using them,” Mr Burgess said.

Mr Burgess told the conference that SPAA hopes that some relief will be granted to SMSF investors who have inadvertently contributed in excess of their contribution caps.

“SPAA has already recommended that excess contributions made in error by SMSF members be refunded and that those at risk of excess concessional contributions be allowed to opt out in advance in certain situations.”

Mr Burgess said the introduction of new rules governing collectables and personal use assets from 1 July 2011 are likely to have a significant impact on how those investments are acquired and held by SMSFs.

However, he noted that the government had last year signalled its approval of the SPAA Guidelines on valuing, auditing and documenting of artwork and collectables in SMSFs.

“SMSF auditor registration and auditor independence, as recommended by the Cooper Review, are also likely to be important issues, along with the accountants’ exemption and what will replace it,” he said.

Mr Burgess said a “sleeper issue” for SMSFs this year is the expectation of greater Australian Tax Office attention on SMSFs paying pensions. Fund assets supporting pension payments are tax exempt. The ATO would likely focus on ensuring that only SMSFs entitled to, claim this exemption.

A new issue for SPAA and SMSF investors is how a SMSF trustee might gain access to a wider range of investments through access to wholesale investment markets.

“An issue which has been on SPAA’s radar for some time is the current distinction between wholesale and retail investors and we are pleased to see this issue being discussed as part of the FoFA reforms.”

“SPAA believes existing rules cause confusion and restrict the ability of trustees to access investment opportunities. At the same time, SPAA is keen to ensure SMSF trustees retain consumer protections under the law,” Mr Burgess said.

The post SPAA National Conference: SPAA predicts year of clarity for SMSFs appeared first on AdviserVoice.