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Paying a pension in kind using the partial commutation strategy

By Daniel Butler on 23/12/2014 in ATO, SMSF strategy, Succession planning, Taxation

Generally, a pension must be paid in cash. However, not every SMSF has ready cash to satisfy the minimum. Thus, it provides much needed flexibility when a pension can be satisfied in kind, eg, by way of an off-market transfer of listed securities, to ensure the pension exemption can continue and the minimum annual payment [read more]

Recent case provides valuable insights for SMSFs

By Bryce Figot on 18/12/2014 in ATO, SMSF cases & decisions, SMSF compliance, Trustee education

The recent decision of Deputy Commissioner of Taxation v Lyons [2014] FCA 1353 provides various insights for self managed superannuation fund trustees, as explained in this article. Facts of decision On 6 June 2008, the Lyons Family Superannuation Fund (‘Fund’) was registered as a self managed superannuation fund. At all relevant times, Mr Lyons and [read more]

More ATO guidance for related party limited recourse borrowing arrangements

By Bryce Figot on 17/12/2014 in Announcements, ATO, Limited recourse borrowing arrangements

The ATO has just released more guidance for limited recourse borrowing arrangements (‘LRBAs’). This guidance is in addition to last week’s ATO ID 2014/39 and ATO ID 2014/40. Although this new guidance is ostensibly aimed at ‘non-commercial’ LRBAs, it should also be very relevant when setting the terms of any related party LRBA loan agreement. [read more]

SMSF borrowing — ATO ID 2014/39 and ATO ID 2014/40 both confirm that nil interest borrowings from related parties can cause non-arm’s length income

By Daniel Butler on 15/12/2014 in ATO, Limited recourse borrowing arrangements, SMSF strategy, Taxation

Two ATO Interpretive Decisions (ie, ATO ID 2014/39 and ATO ID 2014/40 both published on 12 December 2014) address the question: Will ordinary or statutory income derived by an SMSF under a limited recourse borrowing arrangement (‘LRBA’) be non-arm’s length income (‘NALI’) of the fund pursuant to s 295-550 of the Income Tax Act Assessment [read more]

Can an adult child be a tax dependant — ATO ID 2014/22 says yes!

By Daniel Butler on 05/12/2014 in ATO, SMSF strategy, Succession planning, Taxation

ATO Interpretive Decision 2014/22 addresses the question: ‘Can an adult child be a ‘death benefits dependant’ of his or her deceased parent for the purposes of section 302-195 of the Income Tax Assessment Act 1997 (Cth)?’ The adult child was considered to be a death benefits dependant for the purposes of this section. Tax definition [read more]

ATO disqualifies an increasing number of SMSF trustees with adverse consequences

By Daniel Butler on 28/11/2014 in ATO, Audit, SMSF compliance, Trustee education

The Commissioner of Taxation’s recently released annual report for 2013-14 discloses an alarming increase in the number of self managed superannuation fund (‘SMSF’) trustees (and directors of SMSF trustee companies) that are being declared disqualified persons by the ATO. The figures below on the ATO’s other compliance activities are not remarkable. This other activity includes [read more]

New ATO view on cross-insurance within an SMSF!

By Daniel Butler on 21/11/2014 in Announcements, ATO, SMSF strategy

There has been much conjecture as to whether a self managed superannuation fund (‘SMSF’) trustee can implement a cross-insurance strategy after 1 July 2014. The ATO recently addressed this question; which is discussed below. However before discussing the ATO’s view, we begin by briefly discussing what cross-insurance is. What is cross-insurance in an SMSF context? [read more]

SMSFD 2014/1: latest from the ATO on commuting a TRIS

By Bryce Figot on 21/11/2014 in Announcements, ATO, Pensions

The ATO has recently released self managed superannuation fund determination SMSFD 2014/1. SMSFD 2014/1 builds on taxation ruling TR 2013/5 and SMSFD 2013/2 and provides some important insights regarding the ATO’s views on commuting transition to retirement income streams (‘TRIS’). This article discusses some key points arising from the determination. What is a ‘commutation’? Although [read more]

SMSF penalties and sole purpose test illuminated by the Federal Court

By Daniel Butler on 23/10/2014 in ATO, SMSF compliance, SMSF strategy, Trustee education

Two mysteries that loom large on the SMSF landscape are the issues of SMSF penalties and the sole purpose test. However, a recent Federal Court case sheds some light on the uncertainties in these areas. Facts of the case The decision in Deputy Commissioner of Taxation (Superannuation) v Graham Family Superannuation Pty Limited [2014] FCA [read more]

ATO provide key clarification on TRIS strategies

By Daniel Butler on 22/09/2014 in ATO, Pensions, SMSF strategy, Taxation

The ATO in SMSFD 2013/2 confirmed that an account-based pension can be partially commuted to a lump sum to enable a member to take advantage of their low rate cap. (The low rate cap for the 2014/15 financial year is $185,000). However, the ATO in paragraph 11 [read more]

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