The ATO has announced it will be providing guidance for SMSFs in relation to the use of reserves and the practical implementation of the downsizer and First Home Super Saver Scheme initiatives introduced as part of last year’s federal budget.
Speaking at the most recent SMSF Association Sydney Local Community event, ATO SMSF segment assistant commissioner Kasey Macfarlane revealed: “In terms of reserves, we will be issuing some further guidance early in 2018 about the circumstances that we consider where it is appropriate for an SMSF to have a reserve, but those circumstances in our view are quite limited.”
The news comes after the regulator had previously expressed its concerns over the use of reserves in an attempt to circumvent the new transfer balance cap and total super balance limit. To this end, Macfarlane said the tax office will be scrutinising SMSFs using reserves from 1 July 2018.
“We will be particularly looking at those funds that have created new reserves between 2015/16 and 2016/17, as well as significant fluctuations in those reserve accounts,” she said.
ATO guidance will also be released soon in response to the enshrinement in law of the downsizer provisions and First Home Super Saver Scheme.
“[This will be done] through law companion guidelines and then, of course, we’ll be continuing to work very closely, and engage very closely, with the sector around the other various administrative processes that sit around [these legislative changes],” Macfarlane said.
The assistant commissioner also pointed out the regulator had been proactive in its own preparations to accommodate SMSFs that will be using both initiatives.
“I just wanted to let you know that in the background the ATO has actually been working on administrative design around systems, et cetera, so on 1 July [2018] we’re ready to accept those First Home Super Saver Scheme contributions and downsizer contributions,” she said.
