All eyes on the election for SMSFs

The future of Australia’s mushrooming $130 billion self-managed super funds industry is bracing itself ahead of the weekend’s Federal Election, according to the SMSF Professional’s Association of Australia (SPAA).

“Legislation covering the way self managed super funds operate will change no matter which party wins office,” SPAA chairman Peter Hogan says.

The calling of the Federal election has created uncertainty within the self managed super funds industry Hogan says as the ALP, if elected, has indicated it will overturn recent legislation changes impacting on self-managed super funds.

In May this year the Federal Government announced a crack down on self managed super funds, preventing them from offering defined benefit pensions, with the government stating the move was intended to address a range of tax avoidance strategies that had been used by funds to avoid reasonable benefit limits.

“There are changes already in the pipeline, which are coming into effect between 20 September and 1 July next year [and] there are a number of reviews, both current and ongoing, which create uncertainty for professional advisors and consumers,” Hogan says.

“We will have to wait for the outcome of the election to get some clarity on the issue, which will have a direct impact on hundreds of thousands of self-managed funds,” he adds.

Meanwhile the Australian Tax Office is planning a tough new approach to SMSF compliance with an expansion of auditing staff to double the number of annual SMSF audits from 1,000 to 2,000.

The SMFS industry has grown dramatically over the past decade, averaging a year on year growth rate of 20 per cent, with more than 2,500 self managed funds being established each month.

This growth is expected to accelerate, with industry researchers predicting the SMSF industry to reach around $300 billion in assets by the year 2010.