Labor doesn’t support increasing the cap on the number of SMSF members from four to six.
“The government has not provided an adequate or compelling policy rationale for increasing the membership limit of self managed superannuation funds from four to six,” says the report from the Labor Senators on the Committee inquiring into the Bill.
The majority report calls for the Treasury Laws Amendment (2019 Measures No. 1) Bill 2019 to pass in its current form. Labor has called for the SMSF changes to be removed, and the Bill to pass with the other, unrelated, changes it contains.
This leaves the fate of the Bill in the hands of the Greens and crossbench in the Senate. Greens Senator Peter Whish-Wilson, who was also on the Committee, didn’t give a separate view on the Bill. Though the point may be moot, as the Bill has yet to pass the House of Representatives and there are only two Senate sitting days scheduled before the likely calling of the election.
Labor’s criticism of the policy, at least as set out in the report, revolves around the Government not arguing for the policy and the lack of a recommendation from the Productivity Commission.
“No detailed analysis has been provided by the government, nor has any formal public consultation been conducted by Treasury on this measure as far as Labor Senators are aware,” said the Labor section of the report on the Bill.
“As no cogent policy rationale for the change has been provided by the government, and in the absence of a Productivity Commission recommendation about membership, Labor Senators believe that this schedule should be removed from an otherwise non-controversial package of bills.”
The Productivity Commission raised concerns about the performance of SMSFs with balanced under $500,000, though didn’t make any recommendations on either minimum balances or the number of members in SMSFs.
The only submission to the inquiry came from the SMSF Association, which supports increasing the maximum number of SMSF members. The organisation noted in its submission that increasing the member cap could give SMSFs more flexibility to respond to Labor’s policy to stop most refunds of excess franking credits.
Update: Government to drop SMSF member cap changes from Bill
The Government is dropping the proposed increase to the SMSF member cap from four to six.
The measure, announced in last year’s Budget, was only introduced to Parliament in February. It is the only one of the Government’s superannuation-related Bills scheduled for debate this week – which includes only two Senate sitting days.
The Government has proposed an amendment to its own Bill, in the House of Representatives, removing the measure.
It is unclear if the Coalition is dropping this attempt to get the policy through the Parliament before the election or dropping the policy altogether, though the former is more likely.