Over 15% of SMSFs to be affected by Budget super changes

Budget changes, SMSFs affected, over 15%. $1.6 million Transfer Balance Cap, $500,000 lifetime non-concessional contributions cap, BGL Simple Fund, Class SuperThe Treasurer said only 4% of Australians would be worse off under the 2016 Budget changes to super, but over 15% of SMSFs are likely to be affected.

In his Budget speech Treasurer Morrison said 96% of Australians would be unaffected, or better off, under the announced changes.

However a higher proportion of SMSFs will be affected by the changes, according to estimates by SMSF software developers BGL and Class.

BGL, makers of Simple Fund and Simple Fund 360, says the 2016 Budget may affect as many as 85,000 SMSFs, with 160,000 members – over 15% of existing SMSFs.

According to BGL the $1.6 million Transfer Balance Cap will affect “at least 15% of SMSFs”. This compares to an estimated 24% of SMSFs affected by the ALP policy of taxing at 15% pension phase income over $75,000 per individual.

Labor says its policy will affect people with balances of more than $1.5 million, assuming a 5% investment return. However BGL says, based on the average returns of SMSFs from 2010 to 2014, that the effective threshold will be $1.1 million.

Meanwhile Class, makers of SMSF Administration software Class Super, estimates 13.5% of SMSFs will need to reduce pension balances if the Transfer Balance Cap is enacted.

BGL also says the Coalition policy of a $500,000 lifetime Non-Concessional contributions tax will affect at least 10% of SMSFs, though it is “virtually impossible to accurately calculate”.

In terms of the lifetime NCC cap “Class does not have access to historical data required to determine the extent of the impact”.

“This lack of data highlights the challenges for the industry,” said Class.

“No one other than the ATO has ready access to lifetime contribution data. Anyone who has a rollover, or who has changed administrators, advisers or software providers is unlikely to have the appropriate records. The Budget papers noted that the ATO has reliable data back to the retrospective start date of 1 July 2007. The ATO will need to make this data available to the members and their advisers.”

“We are seeing a lot of anger directed at the ridiculous impractical superannuation policies from both sides of politics” said BGL Managing Director Ron Lesh.

“Many people are disillusioned with their superannuation. They feel the proposed superannuation policies of all the major parties are simply unfair to people who have worked all their lives to build retirement savings. They are bad for SMSFs, highly retrospective and in my view bad for Australia’s future.”

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2 Replies to “Over 15% of SMSFs to be affected by Budget super changes”

  1. The lifetime NCC cap will affect everyone with a healthy super balance, not just those with SMSFs. The plan when retired was to draw down the taxed component and in time redeposit as NCC, should we depart this world with any surplus in super our kids will not be burdened with a hefty tax bill (most likely loose half of the taxable component). At the moment this is a very long term strategy and takes years with the limit on contributions at $180k a year, but at least these kids I speak of may find themselves also not having to rely on Government pensions. But that won’t be possible with a Coalition government, thus ending years of thoughtful planning and saving.
    How about a plan to encourage and entice all Australians to save for their retirement, the more generous it is, the better it will be for the country. Anyone with a substantial amount of Super has paid a considerable amount in tax. Tax free on all your super after retirement was the carrot for us. We need encouragement not disillusionment. Put the plan in action and stick to it.

  2. Vicki, you have my vote! The Coalition has betrayed it’s supporters BUT Labor policy will have even more adverse outcomes for those with Super savings!

    “We are seeing a lot of anger directed at the ridiculous impractical superannuation policies from both sides of politics” said BGL Managing Director Ron Lesh.

    “Many people are disillusioned with their superannuation. They feel the proposed superannuation policies of all the major parties are simply unfair to people who have worked all their lives to build retirement savings. They are bad for SMSFs, highly retrospective and in my view bad for Australia’s future.”

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