There is a proposal in the Australian Government’s Stronger Super to ban off-market related party transfers for in-specie assets (non-cash) for owners of self-managed superannuation funds (DIY/SMSFs).
The Government’s proposal, would see SMSFs prohibited from completing in-specie asset transfers, that is transfer non-cash assets such as shares. Instead, DIY funds would have to carry out the transaction through a recognised market such as the Australian Securities Exchange, said Hewison.
“Using shares as an example, this means the investor must sell the asset on the share market, wait four days for trade to settle, transfer the cash into their super fund and re-buy the shares – taking up to a week to complete the transaction,” Hewison Private Wealth chief executive John Hewison said.
The changes were a response to speculation under the Cooper Review that SMSFs were using off-market transactions to minimise capital gains tax by transferring on a date to coincide with a low price for the asset, he added.
Hewison argued that a better solution would have been to tighten the timeframe for the lodgement of transfer documents, rather than add more red tape.
“There is no logical reason to have singled out SMSFs, which are audited, when there is little evidence to suggest SMSFs are using in-specie transfers to avoid capital gains and one could argue that institutional investors would have a far greater impact in this regard,” Hewison said.