ATO Launches Super Scheme Smart
In November 2017 the ATO launched project Super Scheme Smart to educate taxpayers and advisors about tax schemes involving SMSFs.
“Each year we discover complex tax schemes and arrangements designed by promoters solely for the purpose of helping people avoid tax,” says the ATO.
The ATO says it is currently seeing a number of schemes targeting Australians planning for retirement, with these people being encouraged to “inappropriately” channel money through SMSFs.
“The penalties are substantial for those involved in deliberate tax avoidance schemes,” said the ATO.
“And the penalties aren’t just financial; an individual may well lose their right to be a trustee of their own superannuation fund; or in some cases they could go to jail. Promoters of these schemes are also on our watch list.”
These schemes have some common features, they:
are artificially contrived with complex structures usually connecting with an existing or newly created SMSF
involve a significant amount of paper shuffling
are designed to give the taxpayer minimal or zero tax, or even a tax refund
aim to give a present-day tax benefit by adopting the arrangement.
I will provide more information on these schemes in the next few updates; however, a tell-tale sign of these schemes is that they will invariably sound ‘too good to be true’, and as such they generally are.
An unsent text message is upheld in court as the equivalent of the deceased’s will!
A recent case in the Queensland Supreme Court has accepted an unsent text message as an official Will. Whilst this may seem highly unusual, it is a good reminder for all of us to ensure that our
affairs are in order, and the proper documentation is in place.
Did you know that a Will does not necessarily determine where your superannuation benefit will be paid in the event of your death?
The Trustees of a self-managed superannuation fund (SMSF) are actually bound by the Trust Deed and the legislation governing SMSF’s, rather than the wishes of the deceased as set out in their Will.
It is therefore prudent to ensure that the Trustees are informed in writing as to a member’s wishes as to how their death benefit will be paid. This can take the form of a Binding Death Benefit Nomination, provided that is allowed under the SMSF Trust Deed.
If you are unsure as to whether you have communicated your wishes to your SMSF as to how to pay your death benefit, you should consider getting some advice from a professional in this area.
Lodgement Dates for Super Funds – 31 October is nearly here!
Generally, the lodgement date for an SMSF is 15th May of the following year, if the Fund is lodged through a tax agent.
However, this date is brought forward to 31 October if the Fund is lodged by the member or if it was late the previous year.
So, a Fund that missed the 15 May 2017 lodgement date for the 2016 Annual Return will generally be required to be lodged by 31 October 2017.
If your Fund is new, then the date is 28 February of the following year.
It is a good idea to check with your accountant to make sure that you have all your information available so that you meet the Fund deadline to avoid late lodgement fines!
New Requirements for the 2017 SMSF Annual (Tax) Return
New Requirements for the 2017 SMSF Annual (Tax) Return - Funds with Limited Recourse Borrowing Arrangements
There are new disclosures requirements for the Fund’s 2017 Return that will affect your Fund if it has entered in to a Limited Recourse Borrowing Arrangement (LRBA) at any time before 1 July 2017.
The 2017 Return now requires specific disclosure of any related party borrowings, and also of any personal guarantees given by fund members to their lenders in entering the LRBA.
As this is the first time that I have been required to report on member guarantees, if they apply to your Fund please provide these documents to your accountant or directly to me in time for the Fund’s 2017 audit.
The good news is the recently announced ATO extension of the lodgement deadline to 30 June this year.
This means that if your fund annual return has not been lodged there is still a month left for It to be completed.
With all the recent changes to superannuation, SMSF accountants, advisers and auditors are extremely busy preparing themselves and their clients for the changes to come in on 1 July 2017.
Please refer to previous Super News updates for details of these changes.
If you have any questions or concerns you should first contact your accountant.
Last month I looked at upcoming changes to concessional, or pre-tax, contributions limits.
From 1 July 2017, there will also be changes to member non-concessional (after-tax) contributions.
Currently, the limit on member non-concessional (after-tax) contributions is $180,000 within a financial year.
From 1 July 2017, this limit reduces to $100,000 per year.
Please note that if your total superannuation member balance is expected to be $1.5 million or more at 30 June 2017, special rules will apply and you should seek advice from your financial planner or licensed accountant before making further member contributions.
As the 2017 financial year draws to a close and planning for the 2018 financial year commences, please be aware of the changes that will apply to your concessional (pre-tax) contribution limits.
A concessional, or pre-tax, contribution can be made by an employer, a self employed member of a super fund, or an employee who salary sacrifices part of their salary/wages to super.
Currently, the limit on concessional (pre-tax) contributions is $30,000 ($35,000 for people 50 years old and over) within a financial year.
From 1 July 2017, the government will lower the annual concessional contributions cap to $25,000 for all members.