Deborah O'Neill (Robertson, Australian Labor Party) Share this | Hansard source

On behalf of the Parliamentary Joint Committee on Corporations and Financial Services, I present the committee's advisory report, incorporating a dissenting report, on the Superannuation Legislation Amendment (Reform of Self Managed Superannuation Funds Supervisory Levy Arrangements) Bill 2013.

In accordance with standing order 39(f) the report was made a parliamentary paper.

by leave—On behalf of the Parliamentary Joint Committee on Corporations and Financial Services, I present the committee's report on the Superannuation Legislation Amendment (Reform of Self Managed Superannuation Funds Supervisory Levy Arrangements) Bill 2013, together with the evidence received by the committee.

The number of self-managed superannuation funds, or SMSFs, has dramatically increased over the last decade. As at June 2012, there were over 478,000 self-managed super funds in Australia. They represent around 31 per cent of Australia's total superannuation savings. By this measure, they are the largest segment of the superannuation sector.

All superannuation funds, whether they are an SMSF or another type of fund, such as a retail or industry fund, are subject to some form of a supervisory levy. As the explanatory memorandum to this bill notes, this is intended 'to fund the regulatory costs of ensuring funds comply with the superannuation legislation'.

Provided that doing so is cost effective, efficient and consistent with other policy objectives, the supervisory costs incurred by regulatory agencies should be recovered from the entities that are actually regulated, rather than paid for out of general revenue. And this, thankfully, is now common practice.

This bill will make two changes to the current arrangements for the supervisory levy that applies to SMSFs.

First, payment of the SMSF supervisory levy will be brought forward so that it is levied and collected in the year of income that the supervision relates to. This is a logical change and it is consistent with the treatment of APRA regulated funds. So, in a way, this is simply bringing the SMSFs into line with the other funds.

During the committee's inquiry, stakeholders did express some uncertainty about whether the method for collecting the levy would be affected by the proposed change. Currently, the levy is collected through the annual tax return, and stakeholders did question whether it was intended that this arrangement would be replaced with separate invoicing processes. However, the committee has obtained from the Australian Taxation Office a clarification that this will not be the case. This will ensure that there is no additional compliance burden for the SMSF associated change that this bill will institute.

The second measure in the bill is an increase in the cap that applies to the supervisory levy that the government can set. The bill will increase the cap from $200 to $300, although the government has indicated that the actual amount of the levy will be $259 from the 2013-14 income year.

Given that the supervisory levy is a cost recovery charge, it is appropriate that the levy is reviewed periodically and adjusted upwards when full cost recovery is not occurring. For the 2011-12 income year, the levy actually reached the current $200 cap.

Further, there is no sign that the sustained growth in the number of SMSFs is slowing—between June 2011 and June 2012, the number of SMSFs actually grew by eight per cent. This continued growth in the number of SMSFs of around 30,000 a year, coupled with reasonable increases in the ATO's costs, such as pay rises for staff, demonstrates that continuing with the current cap would simply not be practical.

The committee acknowledged that the ATO has recognised the need for it to become more efficient in its supervision of SMSFs, and the government calculation of the new levy of $259 actually assumes a slower rate of growth in the number of SMSFs than will likely be the case and this reflects an economy of scale in the ATO's supervision that should be reached and efficiencies that would follow.

The committee recommends that the House passes the bill. The committee does, however, encourage the ATO to release information on a regular and publicly accessible basis about the costs that it incurs as a result of its SMSF regulation functions. Doing so should help alleviate concern from the sector about increases in the levy and, indeed, will make the ATO more accountable to the sector.

On behalf of the committee, I would definitely like to thank the industry bodies for their ongoing participation in making their submissions as we inquire into these pieces of legislation, and I would also like to thank the officers of the ATO who have assisted the committee during this inquiry. Indeed, I would like to acknowledge the support and hard work of my fellow committee members—and I see the member for Bradfield poised to speak on this bill as well—and, indeed, acknowledge the great work of the secretariat, who have got through an awful lot of legislation that has been referred to us in the last several months.

I commend the report to the House.

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