The biggest event to impact the sector in 2024 was the proposed Division 296 tax passing the House of Representatives without amendment. Given the government mendacity around this brainchild, the broader Australian community now has justifiable concerns that taxes on unrealised gains in the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 will bleed into other areas of their lives, such as investment properties.

And the fact this subpar amendment punishes superannuation funds that can calculate realised capital gains at a member level (SMSFs) and rewards funds that cannot (industry funds) makes Div 296 one of the worst proposals in the history of the Australian taxation system, let alone superannuation.

Naz Randeria, managing director, Reliance Auditing Services

The SMSF industry spent much of the year battling and educating politicians on the complexities, unfairness, and inequities of the proposed super tax changes. This was a significant effort to ensure that policymakers understood the real-world implications of their proposals.

While the objectives of superannuation aim to make retirees accountable, there is a notable lack of accountability from the government when implementing such counterintuitive measures. The primary goal of superannuation is to enable individuals to self-fund their retirement. If every trustee understands and is encouraged to save towards this objective, the burden on the age pension system would be significantly reduced. This seems like common sense.

A major and practical win was the legislative change allowing retirees with lifetime and market-linked pensions to commute their pensions. This provided much-needed flexibility and relief for those previously stuck with rigid pension structures.

David Busoli, principal SMSF Alliance

The rocky passage of Division 296 was a major event, but another significant but less heralded item was the introduction of the need for trustees to confirm any change of tax agent directly with the ATO.

This follows on from the already-introduced director identification number requirements. These, and other anti-cyber crime and anti-money laundering measures, have added to SMSF compliance requirements.

The long-running NALI legislation was finally settled. It featured highly on the radar of tax agents and advisers who, naturally, provided services to their own SMSFs so it was pleasing to see the matter satisfactorily resolved. Disappointingly, the much more onerous general expense NALI provisions were ignored.

The legacy pension legislation finally passed which provided welcome relief to a relatively small, but highly affected, cohort. The objective of super legislation was settled without fanfare. This was disappointing to me as it was a trojan horse designed to encourage superannuation mediocrity. I believe we will see some unfortunate outcomes as a consequence.

Matthew Burgess, director, View Legal

The ongoing focus on various compliance areas by the Tax Office, and in turn SMSF auditors, is perhaps the single most impactful issue for the industry. This said, the Division 296 proposed changes have arguably had a higher profile – not least of which due to the “floodgates” arguments legitimately raised about the “innovative” treasury ideation of taxing unrealised gains.

The consequences of member incapacity continue to have an enormous impact on a day-to-day basis for many advisers, particularly since there are often significant gaps in documentation and skill sets that are not identified until it is too late.

The second-order consequences of SMSF strategies in holistic estate planning continue to have material impacts on many parts of the industry – one simple example is the compliance issues surrounding death payments and interplay with BDBNs.

Daniel Butler, director, DBA Lawyers

Division 296 not being passed. There was so much anticipation surrounding Div 296 and it's been attracting so much attention given the massive and groundbreaking changes of taxing unrealised gains, not being indexed and taxing unrealised gains but not necessarily allowing losses.

This was so poorly designed from a tax equity viewpoint, that it deserved to fail. It is also a very complex system with so many aspects to the regime of adding this and that and then subtracting this and that. Again, Treasury and the government sought to introduce something so complex that it deserved to fail. Interestingly, had Treasury and the government listened to the tax and SMSF industry in particular, we may have had Div 296 today but with more fairness and based on taxable income or a reasonable proxy for taxable income.

The legacy pension changes are also significant and it is pleasing to note that these have been released and were not linked to the passage of Div 296. Again, Treasury and the government listened to the tax and SMSF industry.

The NALI/E rules continue to worry me. While we have a 2 x upper cap for general NALE, specific NALI can result in a disproportionate tax impact. Further change is urgently needed and greater guidance on many of the remaining issues especially the interaction with CGT and NALI where a $100 tainted gain can make a $1 million arm’s length gain, NALI and taxed at 45 per cent. Certainly, this would have to have been an unintended outcome and the law should be fixed urgently. However, despite the ATO confirming this fact, there is deftly silence.

I recall some time back when Treasury consulted with industry in a meaningful way, took points on board and communicated and exchanged in a more meaningful way. These days, everyone seems to be in a big rush like passing 40+ pieces of legislation on the last sitting day in 2024. The government should be ashamed of itself rather than proud as this results in poor decisions and law-making, sets a very poor example and shows how disorganised the whole law-making process has become.

Rather than Treasury and the government listening and taking on board considered and detailed submissions from industry and the professions, it seems that it's all about politics and the games and brinkmanship that is played out between the politicians and the independents where some exert considerable power in either passing or blocking legislative change.

I think we can all assume the law-making process has been lowered considerably in recent years, particularly the intellectual input and understanding as politicians are typically not into detail but big picture newsworthy items that seek publicity rather than making the law better and more appropriate.

Aaron Dunn, CEO, Smarter SMSF

I think, clearly, the two that resonated for pretty much the entirety of the year were the Div 296 tax measures, and then the NALI/NALE finalisation and in many instances, they were sort of working through in similar stages with Treasury and consultation and so forth.

We had a Labor Party that was ultimately consulting or Treasury was consulting with obviously Labor's views expressed on how they wanted to deal with those areas, and what could have been quite consistent in approach ultimately ended up very different.

By that, I mean with NALI/NALE measures. We saw specific exclusions out of the NALI measures for APRA-regulated funds, and a specific set of rules that dictated small funds, so, self-managed funds and small APRA funds. Now we were asking for a similar approach to be done within Div 296 where SMSFs could provide actual information for the calculation of earnings and account balances, and there were limitations for what APRA-regulated funds could do because of their systems and reporting requirements.

The Treasury and therefore the Labor Party weren't interested in that. They wanted to utilise a single approach, and that became a key source of frustration in the industry. So to me, they were the two real big events. I think there's a significant level of optimism now around the existence of those Division 296 measures and their success in their current format. That view certainly wasn't held mid-year, where, as an industry, we felt that those measures were going to get finalised and we had to brace for what that meant with our clients.

But we did see a shift, and a lot of that credit naturally should be going into work done by the SMSF Association and others in Canberra through discussions with crossbench senators and helping them to understand the impact of what these measures would mean if they were being introduced.

Shelley Banton, head of technical, ASF Audits

I think three main ones deserve a worthy mention.

Obviously, the polarising issue of Division 296 continues to haunt the SMSF industry. We must wait to see how this will play out or whether the government will introduce a more equitable tax. The SMSF Association deserves all the credit for getting this unfair and un-Australian tax moved to a zombie measure.

Of course, allowing legacy pensions to commute fully has provided certainty for those stuck in pension limbo. The fact that it was initially linked to the passing of Div 296 and was unexpectedly passed is still a "pinch me" moment for most SMSF professionals.

Lastly, NALI deserves a mention because the general expense of non-arm's length income initially captured all fund income. It has since been watered down to twice-the-difference approach. We have to wait and see how this plays out, whether it's material and whether it will get caught in the NALI net.

On balance, we have a lot to be grateful for regarding where we first started with each of these events and where we finally landed in 2024.