The ATO has revealed around 44,000 SMSFs have elected to apply the transitional capital gains tax (CGT) relief as at 30 June 2018, while 90 per cent of SMSFs that lodged a 2017 SMSF annual return were on time.
ATO SMSF segment acting assistant commissioner Tara McLachlan told the SMSF Association Technical Day Series in Sydney last week about 3 per cent of SMSFs had received a deferral based on individual circumstances.
McLachlan said this indicates about one-third of SMSFs were affected by the transfer balance cap and transition-to-retirement income stream measures, bearing in mind trustees have a choice on whether they apply for CGT relief depending on whether it is in their best interest.
“I think this was a fantastic result and I would like to congratulate you and your trustees on achieving this in what has been a very challenging year,” she said.
The ATO’s 2016/17 annual report showed for 2015/16 SMSF annual returns due during 2016/17, 93 per cent were on time, noting all SMSFs were given an extension until 1 July 2017 to assist them to better prepare for the new super measures coming into effect from that date.
McLachlan also reminded advisers the 2016 reforms mean SMSFs have to look more closely at how exempt current pension income (ECPI) provisions operate, given members can be in both retirement and accumulation phases in their fund as a consequence of the introduction of the transfer balance cap.
Some members with more than $1.6 million in the retirement phase who needed to bring the balance of that cap back to $1.6 million prior to 1 July 2017 needed to change from the segregated method to the proportionate method, meaning they needed an actuarial certificate for the period they used the proportionate method, she noted.
“However, moving on from the transition year there will generally be only a few circumstances where an SMSF is required to get an actuarial certificate,” she said.
“They are where the SMSF is paying a non-account-based pension such as a lifetime pension, where the SMSF is required to use the proportionate method because it disregards the small funds’ assets provision, and where the SMSF has both accumulation and retirement-phase interests but chooses not to use the segregated method.”
She also said which ECPI method is used will determine the availability of the CGT relief.
