Financial services peak bodies have come together to urge the federal government to change superannuation laws that can cause professionals using their skills for personal matters to be hit with the top tax rate on contributions.
CPA Australia, Chartered Accountants Australia and New Zealand, Institute of Financial Professionals Australia, Institute of Public Accountants, National Tax & Accountants’ Association, SMSF Association and The Tax Institute have told financial services minister Stephen Jones that accountants, lawyers, tradies and real estate agents risk breaching laws that have complicated arm’s-length transaction rules.
“The current rules prohibit transactions with related parties at ‘mate’s rates’ or no rate at all,” a statement from the seven peak bodies said.
“Something as mundane as mistakenly using a work laptop to complete a personal task could trigger a breach.”
An accountant using their expertise to complete their own super fund’s returns would be in breach of the arm’s-length transaction rules unless they charge for the service they have provided.
A non-accountant completing their own fund’s returns would not be in breach of the rules.
Real estate agents and tradespeople could find themselves in trouble if they use their professional skills in a personal matter.
“A real estate agent who chooses to sell an investment property owned within their super fund and doesn’t charge commission could also land themselves in hot water,” the statement said.
“The same may apply to a tradie who renovates or undertakes maintenance themselves and doesn’t bill their fund.”
The peak bodies said professionals breaching this law could get a 45% tax rate on all contributions to their superannuation fund.
“An Australian with a $135,000 superannuation balance and an annual income of $90,000 could be slugged $6,000 in penalty taxes if they accidentally fall on the wrong side of these rules,” the statement outlined.
The financial services bodies said they agree that integrity measures should be in place in superannuation laws but that the laws must be amended so that professionals can use professional skills in personal matters without putting superannuation funds at risk.
“These rules were set up to stop risky borrowing arrangements seen over 20 years ago,” they said. “The type of borrowing the rules tried to limit has been outlawed since 2016.
“People are being penalised because of rules designed to fix a problem that hasn’t existed in half a decade. We need to see change.”
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