Member News - deed impact of legislative changes for 1 July 2022

We have recently seen the passing of Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021, which make the following changes that were announced in the 2019-20 Federal Budget:

  • Removal of the $450 SG threshold
  • Increasing the First Home Saver Super Scheme from $30,000 to $50,000
  • Reduces the eligibility for downsizer contributions from 65 to 60 years of age
  • Removal of the ‘work test’ for individuals aged 67 to 75 years, unless they intend on claiming a deduction for personal super contributions.

These changes apply from 1 July 2022.

As part of the Bill, from 1 July 2021, trustees will also have the ability to choose their preferred method of calculating exempt current pension income (ECPI) when they have member interests in both accumulation and retirement phases for part, but not all, of the income year.

The final piece to this jigsaw was the finalisation of Treasury Laws Amendment (Enhancing Superannuation Outcomes) Regulations 2022, which deal with the acceptance rules of making contributions into superannuation.  With these regulations now having been registered, we can move forward with the certainty required to make changes to a number of Smarter SMSF documents.

We have been fielding a number of enquiries about the impact of these measures on the Smarter SMSF Deed, in particular around the work test rules.  As a result, we have put together this member communication to provide clarification on the proposed changes within the governing rules, guides and other SMSF documents.

Smarter SMSF Deed

Within the Deed, the term ‘Authorised Contribution’ is used which is defined as:

“ … made  on  behalf  of  a  Member  or  Members  of  the  Fund  means  a  Contribution, whether by way of Cash, Asset or in kind (including a Fund expense payment, the forgiveness of a debt, the shifting of value to an asset owned by the Fund or any other transaction that is regarded by the Regulator as a Contribution), made to the Fund by a person, entity, government, Regulator, Employer Sponsor where the Trustee is satisfied that the Contribution has met the requirements to accept the superannuation Contribution under the Superannuation Laws.”

By defining contributions in this way, it allows for this type of legislative change to not require Rule 6 in the Smarter SMSF Deed to be updated.  The Guide for Rule 6 will be updated as it provides guidance for trustees (and advisers) to understand the context of how the Rule is to be applied.  The guides are provided simply as an explanatory memorandum to help interpret the Rules.  The guides do not form part of the Rules - they are ancillary to the Rules, providing clarity of the application of the Rules for different situations and transactions relating to the Fund.

View the current trust deed.

This means the following to the specific measures announced:

  • No change is required to deal with the acceptance of contributions by the trustee as a result of the work test being removed for voluntary contributions up to age 75.
  • No change is required to allow for downsizer contributions to be accepted from 60 years of age.
  • No change is required for FHSSS release amounts.

I also note that the ECPI changes do not require any changes in the Smarter SMSF Deed.

Please note that these updates will be reflected across related documents including trust deed upgrades, lost trust deeds and the (new) QROPS deed.

Document upgrades

In addition to the above changes, we will be making specific updates to the following documents available on the Smarter SMSF platform, ready for 1 July 2022:

  • Downsizer contributions
  • Satisfy work test & work test exemption

But wait... there's a pending High Court decision 

Another area of significant interest currently is the pending High Court case decision of Hill v. Zuda Pty Ltd as trustee for The Holly Superannuation Fund & Ors (Case P48/2021). 

In this case the appellant is arguing that an SMSF trustee must follow the requirements set out of SISR 6.17A regarding binding death benefit nominations, and that the ATO’s views set out in SMSFD 2008/3 are incorrect. There have been a number of decisions in different state-based courts that have affirmed that SISR 6.17A does not apply to SMSFs, however this important decision is now being tested at a Commonwealth level.   In simple terms, the notion of non-lapsing BDBNs is being tested where typically such documents must follow the requirements and procedures set out in the fund’s governing rules.

The outcome of this decision could have ramifications right across the SMSF industry.  Naturally, we are following this outcome closely and will provide an update once a judgement has been made.

If you have any additional questions in respect to these measures and the deed, please do not hesitate to get in contact with us.



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