Save
Relief for investors on key tax measure
The government will be providing transitional arrangements for a key budget measure that was set to have a significant impact on taxpayers with pre-existing borrowings in place.
Relief for investors on key tax measure
The government will be providing transitional arrangements for a key budget measure that was set to have a significant impact on taxpayers with pre-existing borrowings in place.
In the 2016-17 federal budget, treasurer Scott Morrison announced the introduction of a lifetime cap of $500,000 on non-concessional superannuation contributions, applicable from 7.30pm AEST on 3 May, and including contributions since 2007.
This posed a significant problem for taxpayers with pre-existing and "sophisticated financing techniques" in place, for the purpose of purchasing assets within an SMSF.
For example, one problematic situation includes when the trustee of an SMSF entered into a contract to purchase an asset using a limited recourse borrowing arrangement (LRBA) prior to 3 May, with the settlement of the contract due after 3 May.
In circumstances such as this, it would be expected that part of the sales proceeds would be financed by the SMSF members via non-concessional contributions, enabling the fund to complete the contract.
Mr Morrison has since written letters to trustee lobby group the SMSF Owners’ Alliance and veteran financial adviser and author Noel Whittaker, indicating that transitional provisions will apply to allow further non-concessional contributions to be made in these types of situation, to the extent necessary to enable the contract to be completed.
"These additional non-concessional contributions will be counted towards the lifetime non-concessional cap, but will not result in an individual being in breach of the lifetime non-concessional cap," Mr Morrison said.
Further, he said transitional arrangements will apply to SMSFs with existing borrowings, including LRBAs.
"Members of SMSFs with existing borrowings will be permitted to make further non-concessional contributions to the extent necessary to ensure the legal obligations of SMSFs that existed on or before the commencement date are met or to comply with the ATO’s practical compliance guideline 2016/5," Mr Morrison said.
"These additional non-concessional contributions will be counted towards the lifetime non-concessional cap, but will not result in a breach of the lifetime non-concessional cap, until 31 January 2017," he said.
McPherson Super Consulting director Stuart Forsyth said that while this only affects a relatively small number of SMSF members, it is undoubtedly good news, and may be a sign of further positive developments to come.
"From our point of view, this creates an expectation that they’ll look at other reasonable cases as they come up. It gives us heart that there will be some scope to have influence still on these measures if the Coalition returns to government and if they’ve got control of the Senate," Mr Forsyth said.
Further, while SuperConcepts "supports and applauds" the move, general manager for technical services and education Peter Burgess has pointed to some practical issues that will need to be addressed.
"For example, how and when will the ATO be notified that these transactions need to be excluded from the lifetime NCC cap and what documentary evidence will be required," Mr Burgess said.
"Industry consultation on this matter, along with consultation on the implementation of the other reforms announced in the budget, will be important," he said.
Tax saving
Why fast-tracking tax cuts won’t stimulate the economy
Treasurer Josh Frydenberg has flagged that previously legislated tax cuts could be moved forward in a bid to help stimulate the Australian economy. ...Read more
Tax saving
Last-minute items to check off before 30 June
With the end of the financial year almost here, an accounting firm has outlined key changes with tax returns this year and flagged some last-minute tax strategies to consider before 30 June. ...Read more
Tax saving
Australia’s richest owe the Tax Office $772m
Australia’s elites and private companies fell $772 million in taxes due to miscalculations and deliberate tax avoidance, the Australian Taxation Office has revealed. ...Read more
Tax saving
Do you have to pay taxes on a trust?
Trusts are usually set up for business, estate planning and investment purposes to separate the legal and beneficial ownership of assets held within the structure. ...Read more
Tax saving
Government rebuffs regional allowance and tax concession reform
A review’s findings into the viability of area tax concessions and payments for regional and remote Australians has had its recommendations shut down by the same government who requested the report...Read more
Tax saving
Penalties for tax fraud in Australia
Public taxes are used to fund government projects in relation to health, defence, infrastructure and many other national and local projects that require public funding. ...Read more
Tax saving
Disaster relief payments receive tax-exempt status
The Australian government has made disaster relief payments to bushfire-affected individuals and businesses tax-exempt while extending tax-free financial support to NSW Rural Fire Service volunteers. ...Read more
Tax saving
Are your franking credits working?
Here’s what you need to know about franking credits and how they work. ...Read more
Tax saving
Why fast-tracking tax cuts won’t stimulate the economy
Treasurer Josh Frydenberg has flagged that previously legislated tax cuts could be moved forward in a bid to help stimulate the Australian economy. ...Read more
Tax saving
Last-minute items to check off before 30 June
With the end of the financial year almost here, an accounting firm has outlined key changes with tax returns this year and flagged some last-minute tax strategies to consider before 30 June. ...Read more
Tax saving
Australia’s richest owe the Tax Office $772m
Australia’s elites and private companies fell $772 million in taxes due to miscalculations and deliberate tax avoidance, the Australian Taxation Office has revealed. ...Read more
Tax saving
Do you have to pay taxes on a trust?
Trusts are usually set up for business, estate planning and investment purposes to separate the legal and beneficial ownership of assets held within the structure. ...Read more
Tax saving
Government rebuffs regional allowance and tax concession reform
A review’s findings into the viability of area tax concessions and payments for regional and remote Australians has had its recommendations shut down by the same government who requested the report...Read more
Tax saving
Penalties for tax fraud in Australia
Public taxes are used to fund government projects in relation to health, defence, infrastructure and many other national and local projects that require public funding. ...Read more
Tax saving
Disaster relief payments receive tax-exempt status
The Australian government has made disaster relief payments to bushfire-affected individuals and businesses tax-exempt while extending tax-free financial support to NSW Rural Fire Service volunteers. ...Read more
Tax saving
Are your franking credits working?
Here’s what you need to know about franking credits and how they work. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
