October is the month the summer birds start to arrive at my home and at work we do our annual walkathon to raise funds for the Kaden Centre. Believe it or not, those two go together quite nicely for me. Getting outside, exploring new local areas to get to my step count is a great way to make sure I don’t miss any of the summer visitors.
This month we have an added treat of a special Federal Budget at the end of the month but I’ll come back to that. First : the walkathon.
The Kaden Centre is an organization you might have heard about before if you’ve followed our blogs in the last few years. It fills a unique gap when it comes to those suffering from cancer or other long term illnesses. Their team of physios, oncology exercise physiologists and other allied health professionals help with exercise programs and dietary advice that are specifically tailored to the unique needs of people progressing through treatment and recovery. The Centre relies on donations to cover 70% of the cost of its services and we aim to help them do that.
As we have in the past, we’re getting behind their annual event – Sweat for Survivors – and this is something where we need your help. A number of familiar Heffron faces will be working in teams and asking friends, family, clients and anyone else who will listen to sponsor them to walk 10,000 steps each day in October.
And hopefully a bit more outside exercise will help make sure I’m match fit for the special Federal Budget on Tuesday 25 October.
All the signs are that this will be – as the new Treasurer, Jim Chalmers, puts it – a somewhat “workman-like” budget. I think this is meant to convey a serious focus on our finances (perhaps it’s the verbal equivalent of wearing a hard hat on TV?). But also flag that we’re unlikely to see major reform right now.
The Treasurer has specifically said the ALP won’t be bringing back their 2019 policies that so spooked those of us in the SMSF world – primarily the removal of franking credit refunds. Many commentators raised that spectre again when draft legislation was released last month to stop companies using money from capital raisings to pay fully franked dividends. It has been widely criticised and I’ll leave others to conclude whether it’s good or bad policy. But a key difference from the SMSF industry’s perspective is that at least this one will have the same impact on all super funds.
And broadly speaking the Government’s agenda for super described back in August didn’t sound too bad for SMSFs:
- not messing with the fundamentals including the sole purpose and preservation and not pushing funds to invest in particular asset classes (such as infrastructure)
- dealing with non-payment of Superannuation Guarantee (SG) contributions
- expanding SG to payments like parental leave
- working with the superannuation sector to improve the development and take up of retirement income products – more of an issue for public offer funds. SMSF members are already very active in starting pensions in retirement!
There’s been some speculation about a fixed cap on the size of an SMSF. I doubt we will see one – the Government specifically ruled that out while in opposition.
Of course the ALP was elected on a platform that included “no new taxes” but there are many ways to tighten superannuation tax concessions without new taxes (or even increasing existing ones). Specifically, the Treasurer has emphasised the need to address our deficit, skills and housing shortages and generally do “big” things at some point. And the Reserve Bank Governor, Philip Lowe, hasn’t been backward in coming forward about our need for some longer term tax reform. However that plays out, it’s likely to impact superannuation.
So I expect we will see change but not yet. I’m anticipating a quiet night for SMSFs on 25 October (I hope I don’t end up regretting those words). I would love to see confirmation that work will continue on the previous Government’s legacy pension amnesty first announced in May 2021 (see our original coverage here). So far we’ve seen absolutely nothing on that. I did wonder if we would see a freeze on the indexation of contribution and transfer balance caps (TBCs) at 1 July 2023. The TBC is due to increase to $1.8m from 1 July 2023 and, if inflation remains high, it may go directly to $1.9m. I hope not. While any significant tax reform that seeks to increase revenue is unlikely to be good for SMSFs, I’d rather see a carefully considered policy than knee jerk (and slightly random) tweaks like this.
Definitely something to look forward to later this month.