On the policy front, there were three stand-out themes in 2015: the Government’s response to the Financial System Inquiry (FSI) Report, the Parliamentary Joint Committee on Corporations and Financial Services’ Inquiry into proposals to lift the professional, ethical and education standards in the financial services industry; and the Tax White Paper.

The government finally responded to the FSI report in October, and when it did a collective sigh of relief could be heard across the SMSF sector. Not only were all the positives from the FSI report accepted by the government, but the one negative for the sector – the proposal to ban limited recourse borrowing arrangements (LRBAs) – was rejected. The government noted “concerns” about LRBAs, but argued the evidence was purely “anecdotal”, and that there was no suggestion of systemic threat to the system. A review in three years’ time has our support.

On raising financial advice standards, the PJC Report, handed down at the end of 2014, made recommendations that proposed a model of professionalism involving professional associations, increased education and ethics requirements, and stricter registration requirements. These were the core elements of a fresh approach to regulating advisors. Not surprisingly, there were, in our opinion, unintended consequences, and the Association has proposed an alternative model that we believe will achieve the same goals. The Government’s response is expected soon.

Finally, the Tax White Paper could still prove to be a real battle of ideas on superannuation tax arrangements. It’s our opinion that the best approach was to assess the tax arrangements in an even handed manner and propose suitable changes where appropriate. With a new Prime Minister and Treasurer in Canberra the appetite to change superannuation’s tax arrangements seems to have grown, making having a consistent policy position even more important now.

In essence, our submission argued against increasing tax on contributions or on superannuation earnings in either the accumulation or retirement phase to improve equity and sustainability outcomes. As an alternative, it may be appropriate to implement a light tax on superannuation benefits that are over a generous tax-free threshold. This approach would claw back tax preferences that are “excessive” to achieving the key objective of superannuation while still allowing people to build adequate retirement savings without additional taxes on contributions and earnings.

On the technical front, the most significant change that had the greatest benefit was the taxation of excess non-concessional contributions, which was backdated to 1 July 2013. It solved the problem that existed with excess non-concessional contributions being taxed at 47 per cent and then retained in the fund. This was achieved by allowing a refund of any excess, plus 85 per cent of a penalty component calculated from the beginning of the year in which the excess arose until the Commissioner notified the member of the excess. In addition, it was possible in some circumstances to employ a strategy that could reduce the taxable component of a person’s total superannuation benefits.

For SMSF trustees, the changes to non-concessional contributions was a good news story. It meant anyone with an excess amount, whether by accident or intention, can now receive a refund without having to pay the draconian penalty that used to accompany even the tiniest breach of the rules.

The operation of the CGT provisions in relation to instalment warrants and LRBAs was amended to ensure no capital gains tax event takes place on the transfer of an asset from the holding trust or bare trustee to the superannuation fund. The new legislation in Subdivision 235-I of the ITAA 1997 not only impacts on superannuation funds but extends to all taxpayers who may have used instalment warrants in the broader context for their own purposes. The new provisions have the effect of merging the legal and beneficial ownership of the instalment warrant so that there is no CGT event and that all transactions relating to it are accounted for in the superannuation fund or the relevant taxpayer.

Amendments to the UK legislation, started on 6 April 2015, sent shock waves through the industry. The changes prevented benefits being paid or withdrawn from UK funds where the member was under age 55 except for certain disability benefits. It meant nearly all Australian funds that had been granted Recognised Overseas Pension Scheme (ROPS) by the UK no longer met that requirement.

The changes to the electronic transfer of contributions to superannuation funds that have taken place over recent times has meant more timely receipt by the relevant funds, including SMSFs. While the introduction of SuperStream has gone relatively smoothly there are still some issues to be ironed out for SMSFs where the employer making the contribution is at arm’s length from the fund member.

Time is fast running out for accountants with their three-year exemption from holding or operating under an AFSL to give SMSF advice ending on 30 June 2016. For those accountants choosing to take up an AFSL, they will be able to provide financial advice on SMSFs, as well as advice on certain financial areas such as superannuation, securities, managed investment schemes, and insurance (life and general).

Time is even shorter for those eligible advisors wanting to offer tax advice with New Year’s Eve the effective cut-off date to register with the Tax Practitioners Board. From 1 January, the process becomes that much harder as advisors will be required to go down the standard paths rather than the streamlined notification process. On both issues, the Association has been working hard with its members to assist them achieve their chosen goal.

That was the year that was.

Andrea Slattery, chief executive officer, SMSF Association