Three tranches of superannuation reforms The federal government has released exposure draft legislation in three tranches to introduce the 2016 budget proposals for the reform of superannuation. These drafts have been released for public consultation. The draft legislation includes changes in relation to: the $1.6 million transfer balance cap, reductions to the concessional and non-concessional […]

Diverting personal services income Taxpayer Alert (TA) 2016/6 Strategies that divert personal services income into an SMSF are being examined by the ATO, with a warning issued under TA 2016/6. Examples include arrangements where payment for an individual’s services is made by the client to a trust/company. That entity then contributes the amount into superannuation […]

Safe harbour guidelines for LRBAs PCG 2016/5 Limited recourse borrowing arrangements (LRBA) need to be set up on commercial terms to avoid an assessment (and tax penalties) as non-arm’s-length income. The ATO’s Practical Compliance Guideline (PCG) 2016/5 has now been released, setting out two ‘safe harbour’ conditions for structuring LRBA terms when dealing with a […]

Debate on taxation of TRIS payments ATO private binding ruling Income payments from superannuation pensions are taxable if paid to a recipient under age 60 (or paid from an unfunded scheme). This is regardless of whether the low-rate cap amount for lump sum withdrawals has been used or not. Interest in strategies to reduce tax […]

New ATO form for contribution reserving ATO form NAT 74851 If contributions are made in June, the SMSF trustee has the ability to leave these amounts in a contributions reserve so assessment is made against the following financial year’s contributions caps. These contributions need to be allocated to a member’s account by 28 July. However, […]

Buy/sell insurance may breach sole purpose ATO Interpretative Decision (ID) 2015/10 Purchasing insurance inside an SMSF to fund buy/sell arrangements may breach the sole purpose test. This has long been a contentious issue, with debate as to whether the sole purpose test is breached. The ATO has now entered the debate with the view the […]

Death benefits more than a journal entry ATO ID 2015/2 and ATO ID 2015/3 When paying death benefits from an SMSF, the ATO has made it clear a physical transaction is required. In two recent interpretative decisions (ID), the ATO stated a journal entry would not meet the requirements of paying a death benefit under […]

ATO ID 2014/39 and ATO ID 2014/40 Trustees of SMSFs should take care when entering into limited recourse borrowing arrangements (LRBA) involving a related party as the lender. In two recent interpretative decisions, the SMSF trustee borrowed funds from a related party at nil interest. The ATO view is the terms of the loans were […]

Loans to a property trust ATO Interpretative Decision ID 2014/23 Loans to related parties are captured under in-house asset rules. This limits the value of these loans to less than 5 per cent of the fund’s balance. When a trust is involved, the relationship between the trust and fund members needs to be examined to […]