The proposal to exclude self managed super funds from the proposed legislation to allow portability of retirement savings between Australia and New Zealand is both “discriminatory and counter-productive.”
The SMSF Professionals’ Association of Australia (SPAA) has made a formal submission to the Federal Treasury opposing the exclusion of SMSFs, arguing it puts SMSFs at a “severe disadvantage” compared with APRA-regulated funds.
SPAA CEO Andrea Slattery says: “This restriction as to where New Zealand-sourced retirement savings can be directed in Australia is unneeded and unwarranted.
“It is especially unwarranted in light of the review into the governance, efficiency, structure and operation of Australia’s superannuation system (the Cooper Review) findings that the SMSF sector was ‘largely a successful and well‐functioning part of the system’ and did not recommend any significant changes to the operation or regulation of SMSFs.
“Although SPAA is aware that the findings of the Cooper Review regarding SMSFs may have been unavailable at the time the Memorandum of Understanding was negotiated with New Zealand, these finding are now available to the Government and as such SMSFs should not be excluded as a possible destination for New Zealand-sourced retirement savings.”
Mrs Slattery says the suitability of SMSFs as a destination for New Zealand-sourced retirement savings is strengthened by the compliance-based regulation undertaken by the Australian Taxation Office (ATO).
“SMSFs are subject to very similar regulatory obligations under the taxation and superannuation laws as APRA-regulated funds and regulated accordingly by the ATO.
“The rate of compliance by SMSFs with taxation and superannuation laws is very high. The ATO has revealed that for the audit years ended 30 June 2004 to 30 June 2009, SMSF contraventions of the taxation and superannuation laws occurred at a low rate of only two per cent of all SMSFs operating in those years having contravened, including a significant percentage being of a minor nature.”
Mrs Slattery adds that SPAA is concerned that the exclusion of SMSFs will possibly result in about one-third of the superannuation industry being unable to be part of the trans-Tasman portability scheme. “This could significantly reduce the effectiveness of the measure, with more and more Australians choosing SMSFs as their preferred retirement savings vehicle to fund their retirement.”
