Author: smsf

Aussiegolfa Continues

Breaching the sole purpose test is one of the most serious SMSF trustee transgressions. The ATO have always regarded both the motivation and purpose of an investment as relevant to this consideration. The Full Federal Court decision in the Aussiegolfa case splits the motivation from the purpose and confirms that arrangements that are on arm’s length...

Breaching the 13.22C Requirements

Last week we mentioned SMSFs investing in 13.22C entities, commonly referred to as related property trusts or companies, and the danger of failing to satisfy the ongoing requirements under Regulation 13.22D. If this occurs the SMSF’s investment in the entity will become a permanent in-house asset as the breach cannot be fixed. If this results in...

Specially Treated Assets

Last week we considered the acquisition of unlisted shares by an SMSF from its members or associates. We mentioned the requirement that such shares be in-house assets to qualify and that eligibility ceased if the company was controlled. We mentioned that this situation was similar for trusts. There are exceptions. The shares or units in company or...

Related Party Acquisitions

Last week we considered the identification of related parties. This week we look at some related party acquisition issues. Generally, an SMSF can only acquire unlisted shares from a member or associate if the company is related. This is because the shares would constitute in-house assets. Naturally, the acquisition would only be allowable if it did not...

Who’s a Related Party?

The SIS Act pays special attention to the inherent conflict of interest that exists in all SMSFs due to the trustees being the members and vice versa. This limits the financial dealings that the fund can have with related parties so identifying who these are is vital. SIS sec 10(1) defines these as a member, standard...

The Problem with Life Insurance

Opportunities are being lost due to a general misunderstanding of the nuances of life insurance in SMSFs. A deduction for term life insurance premiums is allowable, irrespective of whether the premium is paid from an accumulation or a pension interest. Clearly this is irrelevant if the fund is totally in pension mode however, where a portion of...

ATO Accolade

We have never entered any sector award competitions so our general manager, Emma Walker, and her wonderful team have never been publicly acknowledged for the great work that they do. They have, however, been acknowledged by the ATO in a more meaningful way by being officially recognised as having achieved a score of 100% for on time...

Actuarial Surprises

This Snippet has been largely reproduced from an article by Greg Einfeld of Lime Actuarial who has nailed the changes that have been made to the calculation of exempt pension income. Hopefully the regulators will apply some common sense where the result of the changes is just plain silly but that is yet to be seen. The...

SMSF Event Based Reporting

SMSFs have new reporting obligations for transfer balance caps. The transfer balance account report (TBAR) that is used to report certain events is a separate form from the SMSF annual return (SAR). The TBAR enables the ATO to record and track an individual's balance for both their transfer balance cap and total superannuation balance. SMSFs began event-based reporting...

Don’t Generate an Untaxed Element!

Our last Snippet focused on the future service benefit tax deduction. The example showed how a tax saving of about $87,000 could be made if a life insurance policy funded any part of the $1m payment to the member, or tax dependent, within the parameters described. The flip side is the consequence if the benefit is...