Save
ATO outlines compliance hit list for next financial year
The regulator has outlined a series of areas it will be keeping an eye on in the SMSF sector, with related-party transactions high on the list.
ATO outlines compliance hit list for next financial year
The regulator has outlined a series of areas it will be keeping an eye on in the SMSF sector, with related-party transactions high on the list.
In recent years, related-party transactions have been high on the ATO’s compliance agenda for the SMSF sector, and the next financial year will be no different, ATO assistant commissioner Kasey Macfarlane said.
For more on how the ATO defines a related party, click here.
Ms Macfarlane noted that related-party transactions can be a sign of more “complex arrangements” designed to transfer wealth into an SMSF outside of the contribution caps.
Similarly, related-party transactions can also be an indicator of arrangements to transfer income that would ordinarily be taxed at higher rates into the concessional tax environment of an SMSF.
Ms Macfarlane made note of one particular arrangement, which involves an SMSF member who is approaching retirement providing personal services to another entity, and rather than having their fees paid directly to them, they are paid to another entity such as a company or trust that is related to the member’s SMSF, and then that income is distributed from the company or the trust to the SMSF, and paid out to the member as a tax-free pension.
If the money had been paid straight to the member, it would've been taxed at their marginal rate.
“That is an example of one particular arrangement, and we will shortly be issuing some further information on that,” she said.
The ATO will also continue its focus on limited recourse borrowing arrangements (LRBAs), as they persist as an area that trustees can “find themselves in trouble”, particularly where property spruikers are involved.
“Also once again, LRBAs can sometimes be used as a mechanism between related parties to transfer large amounts of wealth into an SMSF beyond the usual restrictions that apply, [such as] the contributions caps,” she said.
The ATO will also be focusing on “extraordinary or out of pattern” growth in the value of an SMSF, which can be an indicator or transactions or complex arrangements that have been designed to transfer large amounts of wealth to a fund beyond restrictions such as the contribution caps.
“Also, it could be an indicator of a tax-planning arrangement designed to transfer income that would ordinarily be taxed at higher rates into the concessionary tax environment,” she said.
As per FY2014-15, the ATO will continue its focus on the correct tax treatment of payments from funds in pension phase.
“It’s just an area where we find that mistakes can actually happen in terms of, for example, meeting the minimum pension payment requirement, and that can impact on the SMSF’s ability to claim the tax exemption in relation to pension income,” she said.
RELATED ARTICLES
Tax saving
Navigating tax laws for capital gains in 2023
The landscape of Australian tax laws surrounding capital gains is ever-changing, with 2023 being no exception. Read more
Tax saving
What you need to know about the tax implications of crypto
One million Aussies are now invested in crypto, but many have not thought about how these investments will affect them at tax time. Read more
Tax saving
Welfare overhaul could give recipients a leg-up
Australia’s Centrelink recipients who’ve been doing it tough are in for a potentially easier time if the federal government pursues ambitious reforms that could provide sturdier safety nets. Read more
Tax saving
Students should think twice before tapping into their super
Former students might want to think carefully before they look to take advantage of the federal government’s biggest first home buyer incentive. Read more
Tax saving
Advocates call for an end to tax cuts
Social services sector advocates have warned that further tax cuts may make solving Australia’s biggest challenges much harder. Read more
Tax saving
ATO and AUSTRAC may gain new phone-tapping powers
A proposed update to electronic surveillance legislation could see the ATO armed with new powers that would allow the agency to bug phones and intercept online communications. Read more
Tax saving
Over 2m Aussies asked the TPB for help during the last year
As the economy recovers, Australia’s tax regulator says it’s planning to put unregistered practitioners under the microscope. Read more
Tax saving
Will you pay higher taxes due to bracket creep?
Bracket creep will see Australians paying more tax on average, unless further cuts are introduced in the future. Read more
Tax saving
Navigating tax laws for capital gains in 2023
The landscape of Australian tax laws surrounding capital gains is ever-changing, with 2023 being no exception. Read more
Tax saving
What you need to know about the tax implications of crypto
One million Aussies are now invested in crypto, but many have not thought about how these investments will affect them at tax time. Read more
Tax saving
Welfare overhaul could give recipients a leg-up
Australia’s Centrelink recipients who’ve been doing it tough are in for a potentially easier time if the federal government pursues ambitious reforms that could provide sturdier safety nets. Read more
Tax saving
Students should think twice before tapping into their super
Former students might want to think carefully before they look to take advantage of the federal government’s biggest first home buyer incentive. Read more
Tax saving
Advocates call for an end to tax cuts
Social services sector advocates have warned that further tax cuts may make solving Australia’s biggest challenges much harder. Read more
Tax saving
ATO and AUSTRAC may gain new phone-tapping powers
A proposed update to electronic surveillance legislation could see the ATO armed with new powers that would allow the agency to bug phones and intercept online communications. Read more
Tax saving
Over 2m Aussies asked the TPB for help during the last year
As the economy recovers, Australia’s tax regulator says it’s planning to put unregistered practitioners under the microscope. Read more
Tax saving
Will you pay higher taxes due to bracket creep?
Bracket creep will see Australians paying more tax on average, unless further cuts are introduced in the future. Read more
More articles
OUR PLATFORMS AND BRANDS
- Accountants Daily
- Accounting Times
- Adviser Innovation
- Australian Aviation
- Broker Daily
- Cyber Daily
- Defence Connect
- Fintech Business
- HR Leader
- Independent Financial Adviser
- Investment Centre
- Investor Daily
- Lawyers Weekly
- Money Management
- Nestegg
- Property Buzz
- Real Estate Business
- Smart Property Investment
- SMSF Adviser
- Space Connect
- Super Review
- The Adviser
- Wellness Daily
- World of Aviation
EVENTS AND SUMMITS
- Accountants Daily 30 Under 30 Awards
- ACE25
- Adviser Innovation Summit
- Australian Accounting Awards
- Australian Aviation Awards
- Australian Broking Awards
- Australian Defence Industry Awards
- Australian Law Awards
- Australian Space Awards
- Australian Space Summit
- Better Business Summit & Awards
- Broker Daily Business Awards
- Corporate Counsel Summit & Awards
- Cyber Security Summit & Awards
- Defence Connect Budget Lunch
- Defence Connect DSR Summit
- Fund Manager of the Year Awards
- ifa Excellence Awards
- ifa Future Forum
- Investor Daily ESG Summit
- Lawyers Weekly 30 Under 30 Awards
- Lawyers Weekly Women in Law Forum
- New Broker Academy
- Partner of the Year Awards
- REB Awards
- Reinnovate
- SME Broker Bootcamp
- SMSF Adviser Technical Day
- Super Fund of the Year Awards
- Women in Finance Awards
- Women in Law Awards
- Accountants Daily Podcast Network
- Australian Aviation Podcast Network
- Broker Daily Podcast Network
- Defence Connect Podcast Network
- HR Leader Podcast Network
- REB Podcast Network
- Relative Return
- Space Connect Podcast
- The Adviser Podcast Network
- The ifa Show
- The Lawyers Weekly Show
- The Smart Property Investment Show
PODCASTS
LEARNING AND EDUCATION
MOMENTUM MARKETS NETWORK
LINKS
STAY CONNECTED
Make your nest egg grow. Register now for nestegg updates.