Div 296 is getting a lot of air space in the SMSF world. Hectares of media coverage, strident commentary from vested interest groups, industry training events….

Yes, if it becomes law, it will have a massive impact on the SMSF industry.

But the ‘if’ is the point. It is all speculative.

Remember:

• The current draft legislation has not passed the Senate. The current government have a tricky crossbench to negotiate with, and the legislative calendar for 2024 is drawing to a close.
• There is an election in 2025, and the current government is in a mild state of disarray. The franking dividends of fiasco of 2019 still haunts their dreams and they have already closed down any discussion about negative gearing. They will be wary of antagonising such a powerful group of voters.
• The opposition have already stated that they will repeal the legislation if they win the next election.
• And if DIV 296 does become law, it will not take effect till FY 2026 at the earliest. Plenty of time for people to get their house in order.

In the meantime...

Valuations and early release schemes slip under the radar.

I will expand on valuations in the next newsletter as there is a lot involved. But suffice to say that industry conventions like the three year rule are out, and the ATO will want to see more evidence.

As to early release of funds, the ATO is cracking down on these.

Admittedly this is not a common problem, but they take a dim view on this. It is prohibited and the ATO are clear that SMSFs are not to be seen as “a vehicle for accessing super illegally or to providing short-term finance”.

So just be mindful when being approached by people who want to set up an SMSF.

As always if you have any queries just give us a call on 1300 874 787.

The last thing any of us want is your trustees in trouble.