The 2016 Budget superannuation changes, in particular the Transfer Balance Cap, are still retrospective, according to the SMSF Owners’ Alliance.
“The $1.6 million transfer balance cap is just as retrospective as the proposed $500,000 non-concessional cap that was withdrawn by the Government largely because of widespread concerns it was retrospective,” says the SMSF Owners’ Alliance (SMSFOA) submission in response to the second tranche of draft Budget superannuation legislation.
“The Tranche 2 draft legislation is also retrospective as it catches people who had already moved their superannuation into pension mode and will require these people to re-engineer their superannuation, and pay tax for which they were not previously liable.”
“Had they known this change was coming, they might have made different decisions about when to retire and how to order their financial affairs.”
The SMSFOA says the “right thing” for the Government to do would be to grandfather the existing rules and only apply the change prospectively.
The SMSFOA also raises issues with applying the Transfer Balance Cap to existing pensions on 1 July 2017.
“The draft legislation anticipates that on or before 1 July 2017, people will know their superannuation balance down to the last dollar. However, for self-managed funds in particular, it can take months for the trustees and the fund’s accountant to assess the value of the assets in the fund, identify the earnings, calculate the tax due and prepare tax returns,” says the submission.
Also, “it is not clear” how information for people with multiple superannuation funds will be collated so the Transfer Balance Cap can be applied.
“We anticipate there will be a lot of confusion and honest mistakes made before the system is bedded down,” says the SMSFOA.
The organisation is calling for a 12 month period, at least, where no penalties will be applied for being in excess of the Transfer Balance Cap.