Whilst much of the media attention focuses on the Senate finalising the ‘Your Future, Your Super’ bill (after a number of amendments), we have seen today as part of the same Senate sitting, two other superannuation-related Bills that have finally been passed.
These Bills, having been in ‘limbo’ for some time are:
- Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 – increasing the maximum allowable number of members from four to six within a SMSF; and
- Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 – allows for the bring-forward rule to apply to individuals 65 & 66 years of age.
New 6 member limit
The Government had indicated that it had remained committed to increasing the number of members in an SMSF from four to six. The concept was floated for the first time in direct response to Labor’s proposed policy to removal the refundable nature of franking credits, which directly impacted SMSFs. Through elections, this committed remained by the Coalition and whilst it has taken some time to eventuate, it now appears likely that Royal Assent of this Bill will be received prior to 30 June 2021, therefore enabling this legislative change from 1 July 2021 (being the quarter after Royal Assent has been received).
This Bill was finalised without amendment, albeit an amendment was moved by Labor (but failed) relating to the conduct of advisers, SMSF trustees and investment performance & governance in 12 months time.
Typically, the timeframe for a finalised Bill to receive Royal Assent is 7-10 days, most likely resulting this law amendment to section 17A of the SIS Act commencing at the start of the new financial year (1 July 2021).
**UPDATE: Laws took effect from 1 July 2021 to allow up to 6 members within a SMSF **
It is going to be critical that as part of any decision to increase the number of SMSF members, that the fund’s trust deed is reviewed to ensure that the deed allows for this increased level of membership, along with the any changes that may be required to a constitution where a corporate trustee exists. At Smarter SMSF, the team is working on changes across a broad number of order forms and documents, ensuring that from 1 July, you will be able to establish a new fund with up to six members, along with the addition of new members into existing SMSFs.
Bring-forward extended for individuals 65 & 66 years
The Senate has now also passed the Bill which enables individuals aged 65 and 66 to trigger the bring-forward rule in making non-concessional contributions, subject to their total super balance (TSB) at 30 June of the prior year. The effective date of this legislation will date back to 1 July 2020, in line with the SIS regulation changes that increased the threshold for individuals to make contributions without requiring to meet the ‘work test’.
As part of finalising this Bill, the Government has agreed to amendments proposed by One Nation which will:
- allow for the recontribution of COVID-19 early release amounts without penalty (i.e. contribution will not count towards the NCC cap), and
- the removal of the Excess Contribution Charge (ECC) in situations where an individual has exceeded their concessional contributions cap through no fault of their own (i.e. SG received on wages is above the CC cap).