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Super System Review: Preliminary Report on SMSFs

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The Super System Review has released its preliminary report, Self-Managed Super Solutions, which contains a host of recommendations. While the Government has not responded to the recommendations, if implemented, they will impact on the SMSF landscape.

The report makes the following key recommendations:

  • Exotic assets prohibited— Investments in collectables and personal use assets should be prohibited, such as paintings, jewellery, antiques, wine, exotic cars and yachts.
  • In-house assets prohibited— SMSFs should be prohibited from any in-house assets. (In brief, an in-house asset is an investment in a related party of the fund.)
  • Leverage and instalment warrants— A review of the borrowing exception (i.e. instalment warrants) should be carried out in two years to ensure that borrowing has not become a significant focus of SMSFs.
  • Annual member disclosure — The corporations legislation should be amended to ensure SMSFs' members are provided with key information annually.
  • Illegal early release— Existing tax laws should be amended so that amounts illegally early released are taxed at the superannuation non-complying tax rate (currently 46.5%) rather than an individuals marginal tax rate.
  • Binding SMSF rulings— The Tax Office should be given the power to issue binding rulings in relation to SMSFs.

Please click here for the full explanatory memorandum

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