Need to know

Stuart Sheary, Senior Technical Manager

Outlined below is all the latest news you 'need to know'.

IssueWhat it meansWhat do you need to be thinking about?
Bills in the lower house

Treasury Laws Amendment (More Flexible Superannuation) Bill 2020

On 13 May 2020, the Government introduced Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 to extend the bring-forward rule to people under age 67 at the start of the financial year, subject to their total super balance. Currently, only people under age 65 at the start of the financial year can trigger the bring-forward rule, subject to their total super balance.

This Bill follows the 2019/20 Federal Budget proposal to increase the:

  1. age at which the work test starts to apply for voluntary   concessional and non-concessional super contributions from 65 to 67
  2. cut-off age for spouse contributions from 70 to 75
  3. age at which people can access the bring-forward rule.

This Bill seeks to achieve the last of the three proposals. The Government intends to amend SIS Regulations to implement the increase in the age at which the work test applies and the cut-off age for spouse contributions.

It’s important to remember that the removal of the work test for individuals below age 67 as well as extending the age at which a client can utilise the three year bring-forward rule has not yet been legislated. This adds an element of uncertainty when advising affected clients. Advisers with affected clients should review the progress of this legislation in June to decide on the timing of contributions to super. Parliament are scheduled to sit again in June.

New Legislation

Superannuation Industry (Supervision) In-house Asset Determination — Intermediary Limited Recourse Borrowing Arrangement Determination 2020

This legislative instrument excludes a self-managed super fund’s (SMSF) investment in the holding trust from being an in-house asset but only if the intermediary limited recourse borrowing arrangement (LRBA) meets certain requirements described within the instrument.

The explanatory statement can be found here

SMSF professionals and trustees should ensure any intermediary LRBA complies with the requirements set out in the legislative instrument to avoid any breaches of the super laws. If any uncertainties arise in relation to a SMSF’s compliance with the legislative instrument, trustees can request SMSF specific advice.

Australian Taxation Office  

PCG 2020/4 – Schemes in relation to the JobKeeper payment

This practical compliance guideline provides guidance on how the Australian Taxation Office (ATO) will apply compliance resources to schemes to obtain access to the Coronavirus economic response payment (the JobKeeper payment).

Advisers should ensure their advice aligns with FASEA’s Code of Ethics. Standard 1 of the Code confirms: ‘You must act in accordance with all applicable laws, including this Code, and not try to avoid or circumvent their intent.

Self-managed super funds frequently asked questions

The ATO have updated several of their SMSF FAQs in the context of the impact of the Coronavirus.

The page is an up-to-date source of reference on the ATO’s approach to current SMSF issues.

The Australian Taxation Office releases new 2020/21 super thresholds

The ATO has released several important superannuation rates and thresholds for the 2020/21 financial year.

The concessional contribution cap and non-concessional contribution caps remain unchanged at $25,000 and $100,000. Please note, clients with catch-up concessional contributions may have a higher concessional contribution cap. The non-concessional contribution cap may also be affected by the client’s total super balance and the availability of the bring-forward rule.

It may be necessary to update affected assumptions in any financial modelling tools.

More information

If you have any questions, or would like more information, please contact the IOOF TechConnect team on 1300 650 414.

The information in this section of the website is intended for financial advisers only and is not to be distributed to clients. It has been prepared on behalf of Australian Executor Trustees Limited ABN 84 007 869 794 AFSL 240023, IOOF Investment Management Limited ABN 53 006 695 021 AFSL 230524, IOOF Investment Services Ltd ABN 80 007 350 405, AFSL 230703 and IOOF Ltd ABN 21 087 649 625 AFSL 230522 based on information that is believed to be accurate and reliable at the time of publication.