Sent: 26-09-2012 14:49:32
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APRA's new data collection standard and the latest attack by the Trade Unions to push for changes to Self Managed Super Funds
There are three topics this week - APRA's new data collection standard and the latest attack by the Trade Unions to push for changes to Self Managed Super Funds.
a. From July '13 APRA regulated funds will have to send a lot more information to APRA.
Some of the data is designed to assist in reasonable comparisons being made between funds and between their various investment sectors.
Most commentary in relation to all investments in Australia focuses on the change in asset prices.
This is very much a pity because this change has led to most retirees not investing in order to earn themselves an income in retirement.
Just as parents of younger children become immune to their incessant noise - except for the stillness and silence when they sleep - we all need to become immune from the clatter generated by the constant and uncontrollable change in asset prices.
I know I'm a voice crying in the wilderness about this but perhaps at some stage the world will wake up from its silliness.
Sadly if you look through the data items proposed to be collected by APRA none of this is going to change. Before APRA finalises the data items it wants to collect from large funds I hope it zeroes in on the income investments have earned.
b. Next issue on the agenda is the ACTU's latest attack - the article in The Australian said that the ACTU thought that if the Government was looking for revenue savings then they should look no further than Self Managed Super Fund.
The ACTU spokesman was quoted as saying, "One proposal is to ensure an "arms-length" valuation on assets that are transferred into the self-managed funds, the second is to make them pay capital gains tax on unrealised gains (like other funds) and the third is to give the Australian Tax Office more authority or resources to audit the sector, for instance by identifying false expenses."
Let's deconstruct these items - the first item will be in place by 1 July 2013 so the ACTU are now down to two proposals. In relation to the second idea, large and small funds use exactly the same tax rules. Perhaps the ACTU should ask large funds why they aren't structured properly to make appropriate use of the various tax rules that most SMSFs seem to be able to handle with consummate ease. In relation to the third, the Tax Office has recently been given more authority and resources.
What exactly are they after? You have to wonder when they're clutching at this rubbish.
Government Ministers and officials get used to keeping a straight face when someone "advises" them about whatever. You have to wonder how anyone who knows even the slightest morsel about super and SMSF in particular would be able to keep a straightface when the ACTU presented this material.
c. Should APRA regulate SMSFs
Recently there have been calls for APRA to regulate SMSFs. I'm not sure what the rationale for this actually is. Perhaps some claim that the ATO isn't regulating SMSFs appropriately. Perhaps these people might think that if APRA were to regulate these funds a greater demand would be made on SMSF trustees.
There are a couple of points to be made here. Firstly, in many ways APRA used to be called the Insurance and Superannuation Commission. The ISC was regulator of all funds including excluded funds (which SMSFs used to be called). The regulator of SMSFs was changed from the ISC to the ATO because the former simply didn't have the capacity to deal with such a large number of people and organisations. Back in the mid to late 1990s many small funds didn't submit annual returns to the ISC and it was unable to effectively do anything about this.
Since that time SMSFs have become more numerous making the paper warfare that APRA would have to handle even harder.
Secondly, suppose APRA did become the regulator of SMSFs and began to make demands for more and more information. If most small funds ignored this requirement - simply because the fund's accountants ignored the requirement or insisted on sending this information via paper - then what would APRA do about this? Perhaps grind to a halt as it sort to prosecute everyone?
Many years ago I heard a rumour that the Government was considering having ASIC as the SMSF regulator.
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