Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Save

Almost 50% tax bills spotted as investors falter on savings strategies

By Reporter · January 07 2019
Reading:
egg
egg
egg

Save

Almost 50% tax bills spotted as investors falter on savings strategies

By Reporter
January 07 2019
Reading:
egg
egg
egg
ATO

Almost 50% tax bills spotted as investors falter on savings strategies

author image
By Reporter · January 07 2019
Reading:
egg
egg
egg
ATO

A former Tax Office boss has found a number of investors managing their own superannuation have been hit with a 47 per cent tax bill as their savings strategies backfire.

Self-managed superannuation funds are required to transact on an arm’s length basis, meaning purchase and sale price of fund assets should always reflect the true market value, and it should be traded or structured on commercial terms.

This prevents investors from taking a ‘mates rates’ approach to structuring their SMSF, and giving themselves an unfair advantage over other taxpayers.

In about 2014, the ATO started to crack down on SMSFs not sticking to the non-arm’s length income (NALI) rules. That’s now starting to bear fruit for the ATO, according to Stuart Forsyth, former senior superannuation official at the Tax Office.

Mr Forsyth said he has seen numerous situations recently where the SMSF trustee has been issued a statement by the commissioner, in the form of a position paper, which indicates there’s been a case of NALI.

Advertisement
Advertisement

A fund can land tax bills in the vicinity of 47 per cent if NALI is proven.

“There are some serious issues there so if someone plans to advantage their fund in any way or they’re going to deal on a non-arm’s length basis with their fund, then they really need to get advice before they do that so that they've got a defensible position if the commissioner comes along some years later,” Mr Forsyth said.

To read more about how the non-arm's length provisions apply to SMSFs, click here

Almost 50% tax bills spotted as investors falter on savings strategies
ATO
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

Join the nestegg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.