In case you haven’t yet seen an excess transfer balance determination you might be interested in the details of one that I’ve been given from an SMSF client who has just transferred his administration to us as a result. His previous accountant had not reduced his pension account to $1.6m as at 1/7/2017. Instead, his $2,876,913 pension...
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...
By 28th October, some SMSFs will need to have reported any pension establishments or commutations that occurred since July 1. These are the funds that have been self assessed as quarterly reporting for TBAR purposes. To work out if quarterly or annual reporting arrangements apply, an SMSF will need to know the total super balance of all...
Sometimes we encounter an SMSF with members who are non-family business associates. Invariably the fund is holding business real property tenanted by the business. Often such arrangements include a limited recourse borrowing. Where SMSF members/trustees are not family members there is the potential for significant problems in the event of a member’s death. In addition, should...
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...
Following the last 3 week's posts I have received a number of questions about related party directors. If two individuals are in a partnership they are Part 8 Associates however, if their business venture is operating through a company of which both are Directors, this (of itself) will not make them associates for the purposes of SIS. Commonly,...
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...
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...
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...
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...