Two recently announced measures will have a dramatic impact on limited recourse borrowing arrangements (LRBA) going forward.
The Government has now responded following consultations involving the draft Superannuation Legislation Amendment (Governance) Bill 2015 and Superannuation Legislation Amendment (Governance) Regulation 2015.
Most APRA regulated superannuation funds and Pooled Superannuation Trusts (PSTs) have significant exposure to over-the-counter (OTC) derivatives due to the requirement to manage currency exposure, obtain exposure to certain asset classes, or through transition management arrangements.
In December 2014, ASIC issued Class Order [CO 14/1252] (Class Order) to address concerns about how some industry participants were adopting interpretations of "indirect costs" for superannuation products whereby the costs associated with investing through "interposed vehicles" were not included in indirect costs disclosure, and to remedy other drafting anomalies and inconsistencies in terminology introduced by the Stronger Super reforms.
Before July 1 2013, excess concessional contributions (CC) were taxed at the highest marginal tax rate of 46.5%. This was the sum of the usual contributions tax of 15% upon contributing, which then attracted a 31.5% tax penalty if the contribution exceeded the concessional contributions cap. The excess CC would then also count towards the taxpayer's non-concessional contributions cap.