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Self-managed super funds (SMSFs) are in ‘urgent need’ of reform for 2013, with One Property, accounting and wealth advisory group honing in on a number of current issues.
Ken Raiss, director of the group, said that there are many rules in the current SMSF guidelines that should be deleted or modified.
“As a relatively young but rapidly evolving model, SMSF compliance guidelines contain more than their fair share of unnecessary and arbitrary rules,” said Mr Raiss.
“Some of these are discriminatory, lack logic or simply make the process of providing for independent retirement unnecessarily difficult.”
One of the factors highlighted was the limited number of investors allowed as members in an SMSF. Currently, they are limited to four, however this number would not cater for an average Australian household with more people, he said.
The inability to borrow funds to improve an asset, such as money to extensively renovate a property, should also be a rule up for modification.
The current inability to buy residential property not at ‘arms length’, such as from a related party, should be changed so that, as long as the sole purpose test is still favourable, this becomes possible. Currently this is only possible with commercial property.
“The ATO must broaden the net of reform to ensure arbitrary SMSF ruling is afforded urgent review and the best interests of Australian investors are put first,” said Mr Raiss.