Government changes ‘strong argument’ to cut SMSF levy

Recent Government measures that oversaw the clearing of a backlog of tax amendments should allow the SMSF levy to be reduced substantially in the May Budget, says Jordan George, Senior Manager, Technical & Policy, for the SMSF Professionals’ Association of Australia (SPAA).

He says the SMSF levy is a cost-recovery mechanism for the Australian Taxation Office (ATO), but with these measures cutting the number of SMSF programs being administered SPAA believes there is a strong case for reducing the levy.

The levy for 2013-14 is $259, a 36% increase from $191 in 2012-13.

“These measures, such as related party transactions, SMSF bank verification, SMSF roll-overs being included as a ‘designated service’ under the Anti‑Money Laundering and Counter Terrorism Financing Act 2006, and taxing super benefits received illegally at the top tax rate, are no longer part of the SMSF architecture, so it seems to fair to assume the cost of administering the SMSF sector has fallen accordingly.

“In addition, the Government’s announcement on clearing the tax amendment backlog pointed to the levy being adjusted to address these changes, and SPAA would urge it to do so in the lead-up to the Budget and then make the appropriate announcement.

“The ATO has agreed to provide evidence for the most recent increase in the levy and why the cost-recovery process for SMSFs had increased, but the industry has yet to see the evidence.”

George stressed that the ATO should be involved as it best placed to know the costs involved, as well as acknowledging that it was appropriate that SMSF trustees pay a levy.

“SPAA has no issue with a levy. But we firmly believe that the levy should accurately reflect the ATO’s costs in administering the SMSF’s superannuation obligations and, as such, should be revenue neutral,” he says.