Sep 2020 4 Minutes
Superannuation Measures – An Update
With Parliamentary sittings resuming, a number of Superannuation related measures have been introduced to Parliament, some of which are being re-introduced for a second time.
SMSF Membership Limit increase from 4 to 6
The Treasury Laws Amendment (Self-Managed Superannuation Funds) Bill 2020 was reintroduced in the Senate on 2 September 2020 proposing to increase the maximum number of allowable members in SMSFs from 4 to 6.
The Government had previously sought to enact this measure as part of the 2018/19 Federal Budget, however these changes were dropped as there was not enough support in the Senate to pass the measures at that time.
The Bill proposes to amend s 17A(1)(a) of the SIS Act to require an SMSF to now have fewer than 7 members (instead of fewer than 5) to satisfy the definition of an SMSF.
The Bill further proposes that for an SMSF with 3-6 directors or trustees, the Bill will also amend s 35B of the SIS Act to require the accounts and statements of the SMSF to be signed by "at least half of" the directors or individual trustees to also satisfy the trustee limit in the State legislation. An SMSF with 1-2 directors or individual trustees must have its accounts and statements signed by all of the directors or trustees.
The Bill has been referred to the Senate Economics Legislation Committee for a report by 4 November 2020.
Superannuation Bring Forward Contributions age limit Increase
The Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 was passed by the House of Reps on 31 August 2020 without amendment. The Bill seeks to extend the bring-forward age limit from members under age 65 to those under the age of 67 in the financial year of the non-concessional contributions.
Individuals under age 67 in the financial year in which they make a non-concessional contribution will be able bring forward up to 3 times (ie $300,000) of their annual non-concessional cap of $100,000, provided that they meet the other conditions.
This aligns the bring forward provisions to the increase in the age before members need to satisfy the work test requirements prior to making contributions to their Superannuation accounts.
The Bill moved to the Senate but had not been passed when Parliament rose on 3 September 2020. This means that the Senate will not consider the Bill again until at least the Budget sittings scheduled for 6-8 October.
COVID-19 early release of Super application date extended
The Treasury Laws Amendment (Release of Superannuation on Compassionate Grounds) Regulations (No 3) 2020, registered on 3 September 2020, gave effect to the Government's extension of the COVID-19 early release of superannuation up to $10,000 until 31 December 2020.
The Government, as part of their Fiscal update in July 2020, announced that they would extend the application period to allow those dealing with the adverse effects of COVID-19 to apply to access a further $10,000 from their Superannuation until 31 December 2020 (rather than to 24 September 2020).
The Bill to alter the due date for the application only extends the date and makes no changes to the original criteria in the Bill passed in April 2020.
The requirements are that a person must either:
- Be unemployed;
- Be eligible to receive a jobseeker payment, parenting payment, special benefit, farm household allowance or youth allowance (other than on the basis that the person is undertaking full-time study or is a new apprentice);
- On or after 1 January 2020, the person was made redundant, or their working hours were reduced by 20% or more (including to zero); or
- For a sole trader, on or after 1 January 2020, the person's business was suspended or suffered a reduction in turnover of 20% or more.
Importantly the release of the Superannuation entitlement must be "required to assist the person to deal with the adverse economic effects of the coronavirus".
If you have any queries about Superannuation and the changes above, please contact Iggy Moro.