The Government has run out of time to get a controversial SMSF reform passed before the Federal election is called, an expert has foreshadowed ahead of speaking at the SMSFA national conference in Melbourne.
The proposed introduction of 3-yearly audit cycles for select SMSFs was announced in last year’s Federal Budget and became the most controversial SMSF measure announced by the Government in 2018, according to Peter Burgess, SuperConcepts General Manager of Education and Technical Services.
“The vast majority of the SMSF sector does not support this particular change because we simply don’t believe the benefits of lower compliance cost and red tape will be realised – instead we will see an increase in the number of SMSFs breaching the rules and a reduction in the number of audit firms specialising in this area leading to lower quality audits,” Mr Burgess said.
In mid-2018 Treasury released a discussion paper which outlined a number of key events that would require the SMSF to be audited for that income year even though the fund may otherwise be eligible for a 3-year audit cycle.
“The idea was to reduce the likelihood of compliance breaches by identifying as many events as possible that would put the SMSF at a higher risk of breaching the rules and therefore should be audited in that income year.
“The problem is it would be a self-assessment regime so it would be up to the SMSF trustees to identify whether or not one of these particular events has occurred.
“Given there has been no legislation introduced into Parliament or even draft legislation released for comment, the government is clearly running out of time, and I would argue has now run out of time, to get this measure introduced and passed before the election is called.
“Any Bills introduced into parliament but not passed by the time the election is called will lapse and will then need to be re-introduced into the new parliament.
“And if there is a change in Government, I don’t think this is a measure which a new Labor government would be inclined to introduce – or at least you wouldn’t think it would be a priority for an incoming government.
“So the likelihood of 3 yearly audit cycles being introduced for SMSFs now appears dependent on the Coalition being re-elected,” Mr Burgess said.
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