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ATO to punish SMSF tax avoidance schemes

The ATO has announced it will come down heavily on SMSFs participating in what are perceived as tax avoidance schemes during the 2016 financial year.

Speaking at the Chartered Accountants Australia and New Zealand National SMSF Conference 2015 on the Gold Coast last month, ATO superannuation acting assistant commissioner Kasey Macfarlane said: “These arrangements are generally only adopted by a very small minority of participants in the SMSF sector, but they do actually pose a serious threat to the integrity of the system.

“So you can expect that the commissioner will take very strong compliance action when he detects these types of arrangements.”

Macfarlane said the types of activities in question included dividend stripping and aggressive tax planning.

She warned trustees who had been participating in those activities but had not been detected yet had a good chance of being caught by the ATO through its coordinated activities with other regulatory bodies.

“We increasingly have access to more and more sophisticated sources of data. We also share information across different government agencies and we will detect these arrangements,” she said.

Moreover, the method used to process those cases would be severe, she said.

“The income tax and the regulatory issues will be assessed together. They won’t be treated in isolation,” she said.

“So SMSF trustees detected engaging in tax avoidance schemes should be put on notice that they are likely to face the possibility of being disqualified as trustees and/or potentially having the fund made non-complying.”

She revealed the regulator had already taken action against some SMSFs involved in dividend stripping.

“There are a number of these arrangements where [we’ve taken] compliance action. They’ve been reviewed by our general anti-avoidance review panel, which includes representatives from senior levels of the ATO as well as external representations, and we have concluded that all of those arrangements are not effective at law,” she said.

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