Meg's Budget Musings

7 Oct 2020

Meg Heffron

Managing Director


Well I didn’t get my Budget wishlist. I wanted the Government to: deal with residency, legacy pensions and the unnecessary complexity for the indexation of transfer balance caps.

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To be honest, I wasn’t optimistic. I did however get some unique Budget night experiences: the ability to watch the Treasurer’s speech as the sun was still setting rather than after dark and an early night.

The Government was true to its word in delivering a Budget that focused on jobs, growth and lowering (rather than increasing) taxes. So it was not surprising to see basically nothing at all relating to SMSFs other than things already announced.

There were some interesting announcements about addressing the inefficiencies and associated costs that come with having superannuation accounts in multiple funds and using underperforming superannuation funds – Lyn Formica has reviewed these and flagged where they may impact clients.  

The last few years have certainly seen much scrutiny on the costs and performance of SMSFs. This is actually a completely reasonable thing to do, it was just unfortunately poorly executed by ASIC. It will be interesting to see a similar bright light being shone on large funds. Given how tough it is to truly compare costs, performance and risk, it will be fascinating to see how this is done.

This was one Budget where we may find we discuss what wasn’t included almost as much as we talk about what was. Leigh Mansell has provided a great wrap up for us.

Finally, any change in personal tax rates, LITO, LMITO and other relevant acronyms always prompts us to consider: is superannuation still worth it? Alex Denham and I dusted off our spreadsheet skills and put together some basic modelling to consider questions like: will salary sacrifice still be worthwhile in the future? Is there a logical threshold at which it makes sense for clients to cash out their superannuation and invest personally? We share some of our early findings in our article.

All in all, we expect many of our readers feel like we do – after the last 6 months, it’s very nice to get through a Federal Budget without seeing major superannuation changes. We can get back to work on the rules we already have.  For once, you can use what you learn without fear that it will change before you’re back in the office.

If you haven’t done so, it would be well worth registering for our Super Intensive Day on 5 November as we will be presenting our latest thinking on all things SMSF.