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Editorial - Superannuation e-news July 2007

Friday 6 July, 2007 by Michael Perry Welcome all to the new era with Simpler Super, or as the government's recent promotional material points out, Better Super. In many respects it will be both of these for those 60 and over.
While the focus of some may have been on finalizing contributions or other SMSF matters, what may have gone unnoticed was a change in the regulations on spouse contribution splitting to prevent members from splitting their undeducted contributions into a spouse's super account. As passed, the new regulations prevent both non-concessional contributions and co-contributions from being split and directed into a spouse's super account after 5 April 2007, or where an RSA is involved, after 30 April 2007.

Trustees are also being put on notice that the new regime requires SMSFs to lodge Member Contribution Statements annually for all members including those who make no contributions in the year. Unfortunately this also impacts those who only receive pension benefits who may be over 65 and retired permanently or those who are over 75 and ineligible to contribute further!
If the government believes that requiring trustees to perform this essentially redundant task improves SMSF integrity and compliance that belief must surely be misplaced. Unnecessary form filling is hardly likely to engender a positive attitude to compliance and it beggars belief that they would require this era of "Simpler or Better Super"!

The government should review this issue and not require members to report annually on nil contributions. Surely the onus should be on trustees to report member contributions responsibly and where nil contributions occur this can be inferred from the fact that no MCS has been forwarded. As it now stands SMSF trustees are responsible for additional form filling and dispatch to the regulator when this is patently unnecessary. It also flies in the face of the streamlining that will combine regulatory and income tax returns, MCS and the levy payment in 2007/08 and future years.

Much publicity and anecdotal evidence suggests increases in aggregate contribution to super in 2006/07. However it is impossible to make immediate and meaningful estimates of the level of additional contributions or the motivations behind them. Whether it was the new regime, the $1 million contribution cut-off date, immediate retirement considerations, ongoing savings plans or incentives to make non-concessional contributions to attract the government co-contribution is not immediately apparent. The budget largesse of doubling the 2005/06 co-contribution already paid out may have also inadvertently played a role in attracting end of year savings into super, which unfortunately will not be doubly rewarded! The contribution statistics for SMSFs will be released by the regulator soon and they may throw light on some of the underlying issues.