Regulation Round ups

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Regulation Round-up: Quarter I, 2018

Lodgement date deferred

Lodgement for the SMSF 2017 annual return has been deferred until 30 June 2018, also giving more time to make transitional capital gains tax elections. This is a Saturday, so SMSFs will in fact have until Monday 2 July to lodge without penalty.

Small business clearing house transition

The small business clearing house (SBCH) is completing the final transition to the ATO, with a move from Department of Human Services to tax office operating systems. Employers have access to the current system until 19 February. There is a week’s downtime and then access to the service will be through the ATO online services business portal using an AUSkey or myGov account. Historical data will be transferred to the new service.

Super funds ceased having access to the SBCH from 22 January. SMSFs may need to register with an electronic service address to reconcile payments.

SMSF position on event-based reporting

The ATO has advised its position on the event-based reporting rules for SMSFs that relate to the transfer balance cap.The rules that apply from 1 July 2018 are:

  • all SMSFs must report by 1 July the details for all income streams in place since 30 June 2017,
  • SMSFs with members who have a total super balance under $1 million can report events impacting on the transfer balances when the annual return is lodged, and
  • SMSFs with members who have a total super balance of $1 million or higher will need to report events quarterly (within 28 days from the end of the quarter in which the event occurred).

Deadline to fix small excesses now passed

Super fund members who exceeded the transfer balance cap by $100,000 or less on 1 July 2017 had until 31 December 2017 to remedy the situation without penalty. The ATO is now sending excess transfer balance (ETB) determinations to pay excess transfer balance tax to any members who did not meet this date.

If an SMSF member receives a determination, they should remove the excess from the income phase as soon as possible to minimise the tax penalty. This needs to be a rollback to accumulation or a lump sum commutation. The excess cannot be paid as income.

SMSF trustees who have not already reported member information need to do so as soon as possible and the member may be able to request an extension of time.

Closing the employer SG loophole

Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No 2) Bill 2017

The Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No 2) Bill 2017 has been passed by the House of Representatives and is currently before the Senate. It introduces a long-awaited measure to close loopholes that allowed employers to reduce superannuation guarantee (SG) contributions for employees who salary sacrificed to superannuation.

If passed, the SG obligations will need to be calculated on the employee’s pre-sacrifice salary and employers will not be able to count salary sacrifice contributions as part of their mandated SG contributions. The measures are proposed to apply from 1 July 2018.

Meeting the retirement definition

Australian Prudential Regulation Authority Prudential Practice Guide SPG280 – Payment Standards

The Australian Prudential Regulation Authority Prudential Practice Guide SPG280 – Payment Standards was updated in July 2017 and provides clear and simple explanations of the conditions of release. This includes clarification that clients over the age of 60 can meet either definition of retirement. It also clarified if these clients are working two or more jobs, they can terminate any one and release all benefits accrued to that point.

Project Super Scheme Smart

The ATO has launched the Super Scheme Smart initiative to educate taxpayers and advisers on what to look out for with schemes the tax office believes are risky and may not be within legislative rules.Through this initiative, the ATO is currently providing warnings on three strategies:

  • related-party property development ventures using interposed unit trusts to divert earnings to an SMSF,
  • deliberately breaching the non-concessional contributions cap so the excess can be refunded from the taxable component, and
  • granting a life interest in an asset to an SMSF so the fund receives all revenue from the asset but not ownership when the member dies.

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