Accounting body CPA Australia has refused to support a tax proposal by Treasury that would restrict self-managed superannuation funds (SMSF) from engaging in off-market asset transactions.
In a submission to the Inquiry into Tax and Superannuation Laws Amendment (2013 Measures No 1) Bill 2013, CPA Australia said it would not support the introduction of Schedule 4, which prohibited the acquisition and disposal of assets between SMSFs and related parties, due to its inequitable and costly outcome for investors.
“CPA Australia does not support the introduction of this measure. We believe it is inequitable to restrict SMSFs from transacting effectively and efficiently off-market when there is no demonstrable evidence of abuse and this avenue remains available to all other investors, including APRA (Australian Prudential Regulation Authority) regulated funds and individuals,” CPA Australia senior policy adviser for superannuation Michael Davison said.
“This measure will increase costs for SMSFs. We believe there are other more effective ways to address potential manipulation, such as imposing time frames in which off-market transactions need to be registered, without adversely impacting the operation of SMSFs.”
Despite the objections, after reviewing the legislation, Davison said it was CPA Australia’s view that the Schedule 4 measure should be implemented “as intended”, as it was difficult to comment “categorically” when most of the regulation detail was still to come.
“The one issue we do have is with the requirement in subsection 66B(3) for the disposal of assets to related parties being on-market (s66B(s)(a)) or with an independent valuation (s66B(s)(f)),” he said.
“There may be situations where a market does not exist for an asset or an independent valuation cannot be obtained cost effectively for a low-value asset or at all, and a fund would be prevented from disposing of an asset.
“This would be particularly problematic where trustees are trying to wind up a fund and are thus prevented from doing so.
“As such, we suggest a provision should be included in the regulations so that where there is no market and the trustee is unable to obtain an independent valuation after taking reasonable steps to do so, the trustee should be able to use their own valuation provided they can demonstrate a reasonable basis for it and it is documented.”
On 14 February, the House of Representatives referred the Tax and Superannuation Laws Amendment (2013 Measures No 1) Bill 2013 to the Parliamentary Joint Committee on Corporations and Financial Services.
The committee is scheduled to report its findings to parliament on 18 March.