The self-managed superannuation industry has welcomed the government’s decision to abandon amendments that would have introduced new regulations on off-market transfers between related parties.
The decision to abandon the amendment comes as the government passed its superannuation reforms – including the passage of the long-awaited loss-carry back scheme for small businesses, first announced last year.
Small business and tax industry officials have been worried the government won’t be able to pass many of its scheduled reforms by the time Parliament ends its current session, which is the last before the September election.
Andrea Slattery, chief executive of the Self-Managed Superannuation Fund Professionals Association of Australia, told SmartCompany the organisation was “very pleased” by the move to abandon the regulation of off-market transfers.
“We’ve always had the feeling this was something that if people understood what it was, then there wouldn’t be such an interest in actually introducing the legislation,” she says.
“We’re very pleased this piece of legislation has been removed,” she says, although adds the government should still examine what would be best practice in this area.
Dan Butler, principal at DBA Lawyers says the removal of the amendment is a positive given there were still unknowns about how the transactions would work.
“It’s probably been pulled for matters of expediency, the government wants to put other matters forward too and they just haven’t been able to work out an amendment that could work here.”
“There were a lot of unknown issues in this. For example, with regard to real estate transfers, did you need two independent valuers, or just one? That was still unknown.”
SmartCompany contacted Superannuation Minister Bill Shorten’s office this morning, but no reply was available prior to publication.
The original amendment would have banned off-market transfers between self-managed super funds and related parties.
However, analysts quickly raised problems with the amendment. The new law would mean transactions would have to be conducted on-market, such as through the Australian Securities Exchange, but the law currently restricts those types of arrangements.
Butler says dropping the amendment provides much more certainty to the industry.
“We were sitting in the dark as to how these things would work,” he says, but also comments the government needs to “get its act into gear”, citing a history of proposing tax changes without fully explaining them.
In the past month tax experts have warned the government still has over 100 proposed changes which haven’t been legislated yet. With only a handful of sitting days left until the election, it is unlikely anything except the most important amendments will be passed.
“The government has been very poor for legislative agenda,” he says. “It’s quite remarkable.”
Meanwhile, the loss carry-back regime is finally making its way through parliament.
The regime was announced last year but until now has not been legislated.
The legislation was introduced into Parliament on the 13th February 2013, passed the House of Representatives on 30th May 2013 and is now awaiting debate in the Senate.
The scheme allows businesses to claim losses of up to $1 million against tax they had already paid during the previous two years. Two new amendments have also removed the possibility a business could claim the loss carry-back during the same year it comes into existence.