There have been a number of developments in Galaxy SMSF that are worth you being aware of.
- ATO is on the warpath against SMSF property development schemes that divert profits from a property development project into an SMSF.
If trustees are using a special purpose vehicle, tread carefully. It must comply with the sole purpose test of SMSFs.
In its recent TA 2023/2 the ATO expressed concerns that some arrangements lacked commerciality and were in effect a mechanism to reduce tax.
Secondly that the view that “as long as the SMSF is not directly involved in any non-arm's length dealing, the NALI provisions cannot apply” is incorrect.
- The ATO’s data matching capabilities are strong in the Force, and they use them relentlessly. As yet another tax agent was banned for misuse of an auditor number. Fraud is fraud.
- Reporting changes effective 1st July 2023:
- Transfer Cap Balance events now need to be reported on a quarterly basis.
- SMSFs that have a pension commencement will no longer be able to rely on valuations from the last annual financial statements. Instead they will have to run interim accounts to calculate the value of each members benefits and the requisite tax components to establish the value of the transfer balance account.
- NALE continues to vex people – especially when it comes to attributing expenses.
The simple rule of thumb is for trustees to make a reasonable attempt to determine if the expenses are at arm’s length and to document that.
- Finally the ATO is also concerned about early release schemes from SMSFs to buy property in a personal name. They are illegal.
The Spring Road Tour invite will be out in the next few days, and we have added Maitland as a new event on the schedule.