SMSF Association calls for transparency in SMSF levy

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The SMSF Association is seeking increased transparency around the SMSF supervisory levy, including a review of its level.

“We believe greater transparency will ensure that SMSF trustee fees are used to regulate the sector with increasing efficiency, regulatory improvements, and an appropriate levy amount,” says the SMSFA 2018/19 pre-Budget submission.

“The SMSF levy has risen from $150 in 2009-10 to $259 in 2012-13, with no increases since then. This was a 73% increase in three years; and a 35.6% increase from 2011-12 to 2012-13.”

“A further significant change for people setting up an SMSF is that the levy is now collected in the income year in which it is assessed. This means that new SMSF have to pay two years’ levy on set-up.”

The SMSFA notes that the increase of the levy was based on a number of Government initiatives which have not proceeded – including SMSF bank verification and adding SMSF roll-overs as a ‘designated service’ for anti-money laundering purposes.

“It is our view that at no stage has there been transparency as to the logic of the SMSF levy amount.”

“The SMSFA firmly believes that the levy should reasonably reflect the ATO’s costs in regulating SMSFs and as such, should be revenue neutral. Unfortunately, the industry has not been privy to information and transparency and have no sight of the cost-recovery process for SMSFs.”

The SMSFA estimates that the current total levy is almost double the last known cost for the ATO to administer the SMSF sector, which was for 2011/12.

“We understand the growth of the SMSF sector may cause challenges for the ATO and result in higher costs in monitoring and administering SMSFs, however, we would expect some scale benefits to accrue to the ATO as the SMSF population grows.”

“We therefore propose a cost-recovery statement be issued for the SMSF levy every three years. Much the same as APRA-regulated entities, the statement will be used to provide transparency as to how the SMSF levy is used to regulate the SMSF sector. This provides accountability and potential for the industry to efficiently utilise its funding.”

The SMSFA is also recommending a higher concessional contributions cap for older people, an increase to the $500,000 catch up contribution threshold and for the SG rate to start increasing two years ahead of the current schedule – with it reaching 12% from 1 July 2023.

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