The ATO is soon likely to allow SMSFs with no assets at 30 June to apply for a return not necessary (RNN) classification as long as they showed that they now contained assets.
“The interesting one for me is the RNN for funds with no assets at 30 June,” SuperConcepts technical services and education general manager Peter Burgess told the 2016 SMSF Association National Conference in Adelaide today.
“Now it seems that the ATO has found a solution here to a problem that has frustrated the industry and the ATO for many years and that is what to do about funds that register with the ATO that have no assets and then come 30 June they still have no assets.”
Burgess said currently the ATO required funds to have assets at the time of registration, which meant there should not be any issues when it came to lodging the tax return as the fund contained assets.
“To help with this process, what the ATO did do last year was say that they will turn a blind eye to breaches of the work test and also contribution cap issues where the fund was making notable contributions just to get the fund started,” he said.
“But it looks as if the ATO is going to make further concessions here so that you won’t need to lodge a return for a fund that doesn’t have assets at 30 June. As long you can prove the fund has assets now, then you can apply for a RNN classification for that fund.
“The ATO has yet to formally announce this, but from what I understand they will be making some announcement about this shortly.”
The industry was also waiting for the ATO to issue further SMSF advice and guidance materials on a number of different issues, he added.
“I think it’s going to be a busy time for the ATO in terms of coming out with these guidance materials this year,” he said.
“So we’re hoping to see some further public guidance around deliberate overfunding strategies, the transition-to-retirement income stream lump sum withdrawal strategy, buy/sell agreements and dividend stripping arrangements with similar features, and related-party loans and safe harbour.”