An article on the website Professional Planner talks about the Federal Government’s stance on the Superannuation sector; one that it has made abundantly clear through the latest Federal Budget. The government had stressed as a part of its pre-election gimmick that it would not be making any changes in the structure of Superannuation in its first term of office. In many ways, it is heartening that the government has stuck to its promise.
The Federal Budget was quiet on Superannuation
The budget disregarded the Super sector for most of its length and the only two topics which fetched some attention were “unclaimed Super” and “conditions of release of terminal illnesses”.
The retirement system prevalent in Australia is nothing short of being world class and maintaining its stability for the foreseeable future (at least) strengthens the faith of the trustees. Put another way, overbearing Super changes in the Federal Budget could have created mass panic. SMSF investors can now take a deep breath and think about strategic changes without fearing that the regulatory hammer will fall on them.
The coalition government has soaked well the sound advice that the Super system did not require any tinkering with. Few issues that will definitely draw greater scrutiny in the coming months will be sustainability of the age pension system and the tax paper program.
You can read the original article here.
We have steered clear of the recommendations made by the Financial System Inquiry in this budget, but this is a topic that will arrest us in close future. Limited Recourse Borrowing Arrangement being used for SMSF lending has fetched its share of critics in the recent past. There are many who feel that it tilts the balance heavily in favour of this unregulated sector. In the low-tax environment prevalent in the SMSF sector, LRBA can be used to leverage the purchase of real estate properties by the SMSF investors.
Just like the Campbell Report had undone the financial market in the year 1981, the FSI report has created tremors all across the SMSF industry. This said I keep doubting how residential investments- comprising of only 3.5% of the total SMSF investment- can throw things off equilibrium.
