A levy on SMSFs in case of theft or fraud would be bad policy and would only have the effect or hurting the vast majority of trustees who play by the rules.
This is the view of the SMSF Professionals’ Association of Australia (SPAA), which has rejected calls for sector to contribute substantially to a $121.5-million APRA levy as “grossly inequitable and fundamentally flawed”.
SPAA chief executive Andrea Slattery argues there are about 470,000 SMSFs and the numbers simply don’t add up.
“Based on the call for SMSFs to pay an extra $38 million in levies to help cover the cost of SuperStream, it equates to about $80 for each fund in our sector,” she says.
“As most SMSFs have only one or two members, it would mean each member would be paying, on average, about $40 extra for the cost of the SuperStream measures.
“No doubt most of the APRA-regulated funds will be able to spread the cost of any levy increase across many thousands of members. On our sums, their levy increase per member will be far less than $40 – probably even less than $5 per member. That is hardly equitable.”
Slattery adds that the SMSF levy has recently risen by $20.
“We assumed this was to cover the cost of SuperStream. If this is correct, this increase will collect $9.4 million or $20 per SMSF or $10 per SMSF member (on average); still well above what each APRA member will pay,” she says.
“We have been a strong supporter of the SuperStream measures and we strongly refute any claim that the SMSF sector is not paying its fair share towards the cost of these measures.
“The figures clearly suggest SMSF members are, on average, already contributing more towards the cost of the Superstream than members of APRA-regulated funds.
“So to say the SMSF sector should be paying more towards the cost of Superstream simply defies logic.”
To watch a short interview with Andrea Slattery on the most important issues facing the SMSF sector, click below.
Slattery argues that: “the SMSF sector is a robust and viable part of the superannuation industry”, adding that the demise of Trio Capital should be put in context.
“The Trio case was the exception, not the rule, and on this basis SPAA sees no justification in imposing a levy that would be both overkill and unfair to most SMSF trustees who make sound and informed decisions,” she says.
A levy has been mooted in both the Richard St John and the Parliamentary Joint Committee (PJC) inquiries into Trio as one policy option to cover compensation costs when fraud and theft occur.
Slattery said in the wake of Trio, there had been a misconception as to what the legal standing of SMSFs is when fraud or theft occurs.
“It’s correct to say that that SMSFs don’t have access to compensation under the Superannuation Industry (Supervision) Act 1993 (SIS) that is available, at the Minister’s discretion, to APRA-regulated funds.
“But there are other legal avenues that SMSFs can pursue when fraud and theft occur.”
To watch a short interview with Andrea Slattery on Trio and the proposed levy, click below.
