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More important super changes
In brief: The Government has announced significant changes amongst amendments to the super reforms commencing on 1 July 2017. In relation to limited recourse borrowing arrangements (LRBAs), it is proposed that the outstanding LRBA balance at the end of each year will count towards a member’s Total Superannuation Balance cap of $1.6M. And also that repayments of a LRBA (both principal and interest) will need to be credited to a member’s Transfer Balance Cap. For Transition to Retirement pension (TRIS) accounts, fund earnings are to automatically become exempt when a member turns 65 or satisfies any other nil condition of release. It is intended to enact the amendments before 1 July 2017.
More: The proposed changes in relation to LRBAs are to counter perceived distortions to the operation of the reforms. There is a concern, for instance, that the payment of pension liabilities may effectively be made from accumulation phase income using a LRBA, giving an effective transfer of accumulation growth to the retirement phase. And that a member’s Total Superannuation Balance may be artificially kept below the $1.6M cap by lump sum withdrawals that are then lent back to the SMSF under a LRBA. These measures will add further complexity, including the need for apportionments where there is more than one member of a fund. The automatic exemption for TRIS pensions is a welcome one, designed to avoid a compliance need to commute a TRIS on satisfaction of a nil condition of release and recommence an account based pension.
06 Apr 2017
06 Jun 2016
Topic: CGT/Income tax/Business and investment structures/Trusts
18 Apr 2016
Topic: CGT/Business and investment structures
17 Feb 2016
Topic: Trusts/Business and investment structures/State Taxes
07 Dec 2015
Topic: Business & investment structures/CGT/Trusts
03 Nov 2015
Topic: CGT/Estate Planning/Income Tax