SMSF Association chief executive John Maroney praised a raft of changes announced in Tuesday’s budget that will reduce complexity and encourage contribution in the self-managed superannuation fund sector.
After what Maroney called “a quiet few budgets for the SMSF sector”, this years budget included reforms to residency rules, an allowance for legacy retirement products to be converted to contemporary products without penalty and a removal of the work test for non-concessional contributions for 67 to 74 year olds.
“We also welcome the government’s decision to abolish the $450 monthly Superannuation Guarantee threshold which will benefit many lower paid employees, especially women in casual and part-time employment,” Maroney stated. “It means individuals who may have previously been unable to top up their retirement savings because they are no longer working may soon be able to do so.”
The association also had a major win by getting the safe harbour exemption extended for SMSF holders who reside overseas. The issue has been a long-running bone of contention for the group, whose membership includes many who travel on a regular basis.
“Regarding residency rules, we argued in our submission that the existing two-year safe harbour exemption under the central management and control test is too short in the context of modern work arrangements, where executives and other staff are often expected to commit to an overseas placement for more than two years, and that this period should be increased to five years,” Maroney said.
Rounding out the policy changes, Maroney highlighted the government’s decision to lower the eligibility age for downsizer contributions.
“Reducing the age at which downsizer contributions can be made from 65 to 60 provides more flexibility for members aged 60 to 64 to top up their retirement savings,” he said. “This is particularly useful in a low contribution cap environment.”