Administration, SMSF

Avoid Div 293 dual deadline confusion

ATO Division 293 tax

Trustees facing potential Division 293 tax liabilities should promptly respond to ATO notices in respect of the tax and consider using personal funds to settle the liability.

SMSF trustees should promptly act on any notices sent by the ATO in relation to a Division 293 tax assessment, with the SMSF Association advising fund members to consider paying any tax liability from personal funds before seeking an authority to release money from their SMSF.

Association technical manager Fabian Bussoletti urged trustees to ensure the details of their fund were accurate and up to date after the ATO announced it would commence issuing Division 293 tax assessment notices as the deadline for personal tax return submissions had passed.

“Fund trustees who receive a release authority should follow the usual timeframes and processes for responding to ATO-issued release authorities in the SuperStream rollover standard,” Bussoletti said.

“It is also a timely reminder to ensure that a fund’s electronic service address complies with the rollovers and release authorities standards.”

He pointed out the timeframes for paying a Division 293 assessment and applying for a release authority from an SMSF varied, making it advisable for trustees to first clear their liability and then request a release authority for their fund and receive a personal refund from the regulator.

“While an individual has 60 days to elect for an amount to be released from their super fund(s), payment of the liability remains due within 21 days of the Division 293 tax assessment,” he said.

“Therefore, to avoid additional penalties being imposed, affected individuals should consider personally paying their tax liability by the due date – even if they intend to elect for monies to be released from their superannuation fund.

“Where the tax liability is extinguished before the fund releases monies to the ATO, the ATO will generally refund any released amounts to the individual – unless the individual has any other tax or Australian government debts owing.”

SMSF trustees who elect to pay a Division 293 tax liability from their SMSF bank account without following the proper legal procedures may expose themselves to additional compliance risks.

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