A hot topic for SMSF trustees during the COVID-19 crises is whether SMSF trustees that hold land can offer rent relief to their tenants, in particular to related tenants, without breaching the superannuation laws.

As announced in 2019/20 budget, the Government has released draft legislation and draft regulations to extend the work test start date to age 67 and to allow the use of bring forward contributions for persons aged 65 and 66.

After being in limbo for a number of years, the bill to introduce the super guarantee amnesty has now passed both houses of parliament and awaits Royal Assent.

The ATO has released a draft legislative instrument and explanatory statement that would permit a holding trustee/bare trustee to borrow under a limited recourse borrowing arrangement (LRBA).

On 28 February 2017, Sladen Legal’s Phil Broderick, Melissa Colaluca and Rob Jeremiah gave presentations on the new super laws.

With the new super laws commencing from 1 July 2017, advisors and trustees of self managed superannuation funds (SMSFs) are starting to consider whether they need to update their SMSF trust deed or their pension documents.

The ATO has released answers to frequently asked questions (FAQs) on the ATO’s safe harbour rules for related party limited recourse borrowing arrangement (LRBA) loans to super funds. The safe harbour rules are contained in PCG 2016/5 and have been discussed in a previous snippet. 

With that date fast approaching it is important that SMSF trustees look to rectify any outstanding related party non-commercial LRBA loans in the next couple of weeks.

There seems to be some confusion about the fate of transition to retirement income streams (TRIS). TRISs will not be abolished from 1 July 2017. Rather, they will no longer qualify for “pension phase” (or retirement phase under the new terminology). 

The new super laws are the biggest changes to super since 2007. Given that most of the measures commence on 1 July 2017, there are a number of planning matters to consider prior (and after) that date. 

One of the most significant consequences of the transfer balance cap is the effect it has on the payment of death benefits. This will affect all couples who have a combined superannuation balance of $1.6 million. 

Under the transfer balance cap measure market linked pensions (MLPs) are lumped with other defined benefit pensions. Defined pensions are treated differently to account based pensions given the inability to commute such pensions.

The transfer balance cap is the new limit on how much a member can have in their pension account and accordingly is a limit on how much a super fund can have in “pension phase”. Income and capital gains are tax free to the extent they are in pension phase. To the extent that a super fund is in “accumulation phase” its income is taxed at 15% and capital gains, on assets held for more than 12 months, are taxed at 10%. 

The headline items to this measure is that the non-concessional contributions cap will be reduced from $180K to $100K, the “bring forward rule” will be reduced from $540K to $300K and that members with account balances over $1.6 million will not be able to make non-concessional contributions. But like most of the new measures there are additional complexities to the new non-concessional cap measures.

The transfer balance cap measure includes a transitional CCT relief via a cost base reset. This relief is designed to ensure that only capital growth post the introduction of all of transfer balance cap (ie from 1 July 2017) is taxed. However, like all of the new measures the relief is complicated and requires careful consideration prior to 1 July 2017.

The Victorian Government has passed legislation to increase the duty surcharge on purchasers of residential property by foreign persons to 7% for contracts entered into from 1 July 2016. The changes contain a number of other changes to the foreign purchaser duty regime. 

In in an unheralded move, the Victorian government has extended the land tax exemption for primary production land in an urban zone (contained in section 67 of the Land Tax Act 2005) to include land owned by a trustee of a super fund of which all the members or beneficiaries are relatives and at least one of those members or beneficiaries is normally engaged in a substantially full-time capacity in the business of primary production of the type carried on on the land.

In an update on our previous Sladen Snippets (see here and here), the ATO has announced that the date for rectifying non-commercial related party limited recourse borrowing arrangement (LRBA) loans made to SMSF trustees has been extended from 30 June 2016 to 31 January 2017. 

Further to our snippet in April the changes to the public trading trust rules have passed into law. 

It’s hard to know what to do with a budget handed down by a Government that will not have enough time to pass any measures before it goes into an election. Do you follow the current laws or the laws as they are proposed to be changed in the future (if the Government is re-elected and if it can pass the measures in the newly constituted parliament)? That is the situation we currently find ourselves in with the proposed super changes and in particular the lifetime non-concessional contributions cap.