When the Treasury Laws Amendment (Self-Managed Superannuation Funds) Bill 2020 came back to the Senate in early September, it once again put on the table a proposal to scale SMSF member limits from four to six. Although Labor has expressed concern over potentially negative outcomes for SMSF members, the Senate Economics Legislation Committee recommended the bill to be passed.
According to the committee, most submissions were in support of the bill, although a range of different opinions was acknowledged. Some doubted the basis for the bill, saying that the lack of demand for an increase in the limit of SMSF members negated the need for it in the first place. Regardless, the committee viewed these skeptics as voicing generalised opinions as opposed to concrete concerns backed by compelling evidence against the bill.
At the heart of the issue seems to be the committee’s comment that since the 1990s, a significant growth has occurred in the SMSF sector, which now equates to about 33% of Australia’s $2.76 trillion in retirement funds. The committee found that the bill’s amendments would bring clear benefits to Australians – especially for families of more than four people, who sort out their own superannuation. The committee reasoned that families should be given the choice for a single SMSF if they desire it. As an added convenience for this expanded arrangement, the decision for families to enter into a single SMSF would also reduce their administrative fees.
Labor senators feared that the legislation could have negative impacts for SMSF members as a result of poor financial advice. Labor therefore urged the Senate to reject the bill and instead follow the changes advised by the Productivity Commission as a way of establishing more cautious SMSF recommendations.