CGT relief errors surfacing

Kasey Macfarlane

Kasey Macfarlane

The ATO has already been notified about errors made in the calculation and implementation of the transitional capital gains tax (CGT) relief provisions contained in the super reforms.

Speaking at the SMSF Association NSW Sydney Local Community lunch yesterday, ATO SMSF segment assistant commissioner Kasey Macfarlane said: “Already SMSF auditors are telling us that there are some common mistakes in terms of people incorrectly determining their eligibility for that transitional relief, incorrectly determining which assets are eligible for that relief and miscalculations in deferred capital gains amounts where people are using the unsegregated method.”

Macfarlane revealed the regulator was also witnessing confusion regarding the subject.

“We are getting a lot of questions still, through our advice lines, around when certain things happen.

So where you’ve had a pension, for example, that was 100 per cent in pension phase and then an additional contribution is made, effectively invoking the unsegregated method, how does it all work in those particular circumstances,” she noted.

“We’re getting a lot of other questions around valuations and the timing of when cost bases need to be reset, so there are a lot of considerations there.”

She stressed the ATO’s experience to date illustrated a significant amount of preparation work was required before a trustee can determine whether or not they elect to use the transitional CGT provisions.

SMSF trustees have until the due date of their 2016/17 annual return to nominate if they will take advantage of the relief provisions.

“It’s not all just about ticking a box and making the election. The key point that I’d stress is there are a number of factors to consider before you get to that point,” Macfarlane said.

“So don’t leave it to the last minute with your clients. Don’t think that it’s going to be a simple exercise when the time comes of ticking the box and saying yes or no.”

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