Regulation

The plan to align the tax treatment of off-market share buybacks with that of on-market buybacks puts smaller companies, self-funded retirees and retail investors at a disadvantage, according to portfolio manager Scott Kelly, who worries the proposed changes are “just the beginning”.

In a review of financial product issuers’ compliance with requirements meant to ensure complex and high-risk investments are kept out of the wrong hands, the regulator found room for improvement – and reminded issuers of its enforcement powers.

Following the Labor government’s decision to shelve a program meant to streamline and modernise Australia’s business registry system, the SMSF Association has argued for keeping “key aspects” of the scheme that would have meant material improvements for corporate trustees and the SMSF sector.

While she acknowledged some in the industry may be resistant to expanding the scope of who can provide advice, the principal architect of the Quality of Advice Review urged support for its adoption, saying her recommendations are good for advisers and, most importantly, for consumers.

Approximately a third of SMSF holders under advice will be hurt by the new cap on discounted superannuation balances, the researcher says. A bump in the TBC cap will help some, but add to complexity for advisers.

The regulator has issued 26 stop orders against 18 companies for failing to adequately target financial products to the appropriate market since the “design and distribution obligations” regime began, it said in an initial compliance review. And it warned that closer scrutiny is coming.

Nearly 32,000 customers of Australia’s four major banks fell victim to scams in the 2022 financial year, bearing 96 per cent of the losses as reimbursement and compensation rates remain extremely low. ASIC is now pushing financial institutions to improve their approaches to scams and better support their customers.

Peter Burgess told the SMSF Association’s National Conference the industry group has pushed for some of the developments, while it continues to oppose others, such as a high-balance cap. The government now plans instead to double the tax rate for funds with very high balances.

The success and popularity of SMSFs has also given several hundred thousand people direct access to their retirement savings. More concerning, the ATO believes, is that fraudsters are starting to take notice.

Superannuation tax breaks will cost the government nearly $53 billion this year, nearly matching the cost of the entire age pension program, according to a new analysis that says major reform is needed. Meanwhile, the government has signalled a tightening of super legislation.

The federal government is seeking feedback on proposed changes to rules aimed at preventing non-arm’s-length transactions by superannuation funds, in a bid to address concern that SMSFs and smaller funds that breach the provisions could be disproportionately penalised.

Litigation involving estate planning and superannuation is ramping up, with major impacts on self-managed super funds, and in particular trustee obligations. Cooper Grace Ward partner Hayley Mitchell discusses key case law SMSF trustees should be sure to know about.