CGT concessions a specialised field

CGT concessions advice

SMSF members wanting to use the small business CGT concessions should seek specialist advice when doing so, regardless of the practitioner involved.

A technical expert has stipulated specialist advice, regardless of the particular practitioner it comes from, must be sought by SMSF members when looking to make a contribution to their fund using the small business capital gains tax (CGT) concessions due to the intricacy of the governing rules.

“Given the complexity of the CGT concessions, a specialist [should be engaged] to provide advice [regarding the issue]. They would need to look at and assess the rules, whether it’s the retirement exception, whether it’s the 15-year rule, go through and work out all of the relevant tests [to determine] the basic conditions [have been met, such as] the $6 million assets test and the turnover test,” Accurium head of education Mark Ellem told attendees of a recent technical webinar he hosted.

“Whether that is assessed by the business accountant, the tax accountant [or] SMSF adviser [doesn’t matter, but it must be] someone who is a specialist and understands those CGT rules.”

Ellem pointed out this initial assessment will provide the member in question with an indication as to how much of the intended contribution will be counted against the CGT lifetime cap.

Further, he took the opportunity to remind advisers and fund members of the need to follow the proper protocols to ensure the contribution is treated correctly.

“When that contribution is made, the relevant election form, and there’s an ATO form that needs to be completed [but] not lodged with the [regulator], needs to be provided to the trustee of the fund no later than that contribution is made if it is going to come under that CGT lifetime cap,” he noted.

“If [the election form is submitted] after [the contribution under the small business CGT concession has been made, then] it’s too late and the contribution will count toward the standard non-concessional contributions cap.”

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