ATO announce targeting of certain SMSF areas

Jul 22, 2015 | Personal Wealth, SMSF

Simon Flowers

At a recent CPA SMSF Conference the Acting Assistant Commissioner for Superannuation Kasey Macfarlane announced the ATO were targeting certain areas in relation to SMSF. These include:

  1. Dividend Stripping arrangements (TA 2015/1) – activities where taxpayers use SMSF to obtain refunds of imputation credits of private companies. These activities are usually contrived arrangements where the only purpose of the structure is for tax evasion reasons.
  2. Unexplained Valuation changes – where assets have been increased or decreased significantly from one year to another, the ATO will consider these funds to be high risk and may receive a questionnaire or audit form the ATO explaining the reasoning why certain assets increased or decreased significantly.
  3. Private/non arms length transactions – these are always on the target list for the ATO. Trustees must ensure transactions involving related parties must be done at arms length, otherwise there is a risk of getting taxed at 47%.
  4. Paying pensions – a greater proportion of super fund members are entering pension phase which means less tax payable by SMSF. The ATO have advised that pensions must be set up correctly following the trust deed and market values of assets are used on the commencement. They also remind people that the preservation age for members commencing pensions has increased to 56 years from 55 from 1 July 2015.
  5. Limited Recourse Borrowing Arrangements (“LRBA”) – The ATO have seen numerous LRBA not set up correctly. We are also seeing practically that many banks are not doing these anymore or restricting the type of assets that they will borrow against eg residential vrs commercial. It seems that the only LRBA that will work in the future will be self funded ones where banks are not involved – which incidently are the ones that the Government do not like.
  6. Low cost SMSF audits – the ATO will conduct reviews of those auditors who are chargeable small amounts for SMSF audits, as they do not believe they can conduct an audit for low cost.
  7. Superstream – has started for medium and large employers and will commence from 1 July 2016 for small employers.

If you require further information in relation to any of these items please contact Simon Flowers or Cathy Walley of our office.

Related insights

Four ways a business accountant can help you with EOFY

Four ways a business accountant can help you with EOFY

The end of financial year (EOFY) can be a particularly busy time for business owners, as tax time tasks are added to your usual schedule. Hiring the assistance of a business accountant for EOFY can help to ensure that you maximise your potential at tax time while...

read more
Must-do Tips to Prepare Your Business for Tax Season 

Must-do Tips to Prepare Your Business for Tax Season 

End of financial year is fast approaching, and now is an ideal time to get organised ahead of the busy tax season. Your business can avoid any unnecessary stress or setbacks this EOFY by being prepared in advance by following a few simple steps.  1/ Review your...

read more
Federal Budget 2024-25: What you need to know

Federal Budget 2024-25: What you need to know

Treasurer Jim Chalmers handed down the 2024-25 Federal Budget last night, forecasting a surplus of $9.3 billion this financial year. This is the second year in a row the Albanese Government has delivered a surplus, but forward estimates show double-digit deficits for...

read more

Subscribe for the latest news + updates

Get in touch to explore your opportunities with an LBW expert and discover your journey to a better financial future.