superannuation and trusts

Recent legislative changes have clarified the social security implications of commuting 'legacy' pensions that were previously asset test exempt. An unintended consequence of the legacy pension amnesty period was that the mere option to commute these pensions, even if not exercised, caused them to lose their asset test exemption from December 7, 2024. This could have led to a clawback of overpayments. However, a new determination, the Social Security (Asset-test Exempt Income Stream Guidelines) Determination 2025, allows the Secretary to continue treating these legacy pensions as asset test exempt if the loss of exemption is solely due to the commutation option. Furthermore, any debts arising from the commutation of legacy pensions will be waived, providing greater certainty for affected social security recipients.

The SMSF Association has voiced strong concerns regarding the Compensation Scheme of Last Resort (CSLR) funding model following the release of the FY27 Initial Levy Estimate of $137.5 million. CEO Peter Burgess highlighted that the personal financial advice sub-sector is disproportionately bearing the cost, with $126.9 million assigned to it. The association argues that it is unfair and unsustainable for the financial advice profession to solely fund the costs of failed advice and products, especially with the potential for further increases due to Shield of First Guardian claims.

The SMSF Association is reaffirming the need for high professional advice standards in the SMSF sector following ASIC's Review of SMSF Establishment Advice (Report 824). While acknowledging the report's findings highlight areas for improvement in ensuring consumers receive competent, specialist advice when considering SMSFs, the Association's CEO Peter Burgess cautioned that the review's targeted, risk-based sample may not represent the broader quality of SMSF advice. The Association emphasizes that SMSF advice is a specialist area requiring specific competencies and encourages professionals to pursue accreditation and ongoing development.

The federal government is focusing on enhancing the retirement phase of superannuation as a key priority, aiming to improve the range and quality of product offerings available to individuals transitioning from accumulation to retirement. Minister for Financial Services Daniel Mulino acknowledged that while the accumulation phase is strong, the retirement phase requires development to match its efficacy. This focus will also involve improving financial advice during the transition period. The government is exploring this through discussion papers on data collection and best practice principles, working collaboratively with the financial sector.

Several accounting bodies, including CPA Australia and the SMSF Association, are calling on the ATO to extend transitional relief for employers navigating the upcoming Payday Super reforms, slated for implementation on July 1, 2026. They argue that the significant changes to payroll, finance, and superannuation systems, coupled with the discontinuation of the Small Business Superannuation Clearing House, will be particularly burdensome for small businesses. The bodies are requesting an extension of the compliance period from June 30, 2027, to June 30, 2028, and clearer guidance on concepts like 'reasonably practicable' to ensure a smoother transition for employers. Beyond extending the compliance window, the accounting groups have also requested ATO-led messaging to help employers monitor superannuation payment timing and system performance. They are seeking clearer relief for employers impacted by fund mergers, incorrectly rejected contributions, and delays from third-party providers, emphasizing the need for a fair and practical transition for businesses.

Superannuation legal specialist Michael Hallinan suggests that Self-Managed Super Funds (SMSFs) are a suitable vehicle for minor children receiving Super Guarantee (SG) contributions, particularly following the removal of the $450-per-month minimum threshold for SG payments effective from July 1, 2022. This change means children under 18 who undertake any form of employment, even part-time or holiday work, are now eligible for SG contributions. SMSFs offer advantages such as controlled costs, shared administration expenses, and proportional cost allocation, which can be more beneficial for small super balances compared to public offer funds. While minors can join an SMSF if permitted by the trust deed and represented by a parent, they gain more autonomy and responsibilities, including potentially becoming a trustee or director, once they turn 18.

This article, presented as a retrospective of the top five stories of 2025, mentions ASIC taking action against the Venture Egg boss following a $1.2 billion fund collapse. While the article does not directly discuss superannuation or trusts in detail, the ASIC action and fund collapse could have implications for investors and the broader financial landscape, which may include superannuation assets.

A financial services licensee (AFSL) and its associated advice firm have been penalized $925,000 by ASIC for providing conflicted remuneration. The firm advised clients to invest in managed investment schemes where it received undisclosed fees, creating a conflict of interest. ASIC found that the firm failed to act in the best interests of its clients and breached its obligations under financial services laws. This penalty highlights ASIC's ongoing focus on conflicted remuneration and the importance of transparent fee structures in financial advice.

Draft legislation aimed at addressing integrity issues within the superannuation system is expected to create both winners and losers. While the precise details of the legislation are not yet fully outlined, the government's intention is to improve the integrity of the superannuation landscape. This implies potential changes to existing rules or structures that could benefit some individuals or entities while negatively impacting others. Further analysis will be required once the specific provisions of the draft legislation are released.

The article briefly discusses the potential for Self-Managed Super Funds (SMSFs) to generate income by renting out investment properties through platforms like Airbnb. It highlights the flexibility of short-term rentals, avoiding long-term commitments. However, it strongly advises thorough research before pursuing this investment strategy.