With a huge number of technical changes being introduced within the self-managed super fund (SMSF) sector, the SMSF Professionals' Association of Australia (SPAA) has expressed concern with several components.
At the opening plenary session of SPAA's annual conference in Melbourne yesterday, SPAA technical director Peter Burgess said new requirements that SMSF assets be kept separate from a trustee's other assets do not go far enough because there is no specific requirement for corporate trustees to comply.
Burgess welcomed a change to the proposed requirement that a fund's assets be valued at net market value, as per Cooper Review recommendations, when preparing the fund's financial statements.
Net market value would have meant factoring in estimated disposal costs, adding to the cost of preparing statements, as well as being out of step with how assets are valued in most other cases. Based on consultation this was amended to market value, Burgess said.
However, funds that hold a property as the major asset may still need to factor in disposal costs to get a more accurate valuation, he added.
A new requirement to regularly review a fund's investment strategy may mean an annual review, but the strategy should also be reviewed following events such as retirement or a new member joining, he said.
Under a further new requirement, trustees need to consider the insurance needs of members, which Burgess said may have ramifications for advisers.
An investment adviser may need to have the right competencies and licensing to advise on risk, even when the trustee holds all of their insurance outside their SMSF, he said.
SMSF advisers will also have to get their heads around market crossing, which will become the only way to get listed assets into a SMSF when new regulations come into force on July 1 this year, he said.
Forcing trustees to go on-market is a breach of the Corporations Act because you can't sell an asset with the intention of buying it back so there may need to be an amendment for SMSFs, he added.
Burgess expressed concern over brokerage fees in market transfers, which under the current rules could run into thousands of dollars for sizeable transactions of several hundred thousand dollars.
"The other issue that concerns us is if there is no ASX-listed price," Burgess said. Since some stocks don't have one, SPAA has asked whether SMSFs can use the most recently traded price.
