Self Managed Superannuation Funds – Is it for Retirement?

       

A fundamental requirement is that superannuation funds meet a sole purpose test – the provision of retirement benefits.  If it appears that there is a different purpose, the fund can become non-complying.

The auditor, the tax office and the court, will look at all the circumstances to form an opinion.  If that happens, the trustee will have difficulty proving them wrong.  (That is called burden of proof).

Is it likely that a purchase of a residential property and leasing it to a child, who doesn’t pay rent or pays less than market rent, would be to the benefit of the members?

Do you think the purchase of a caravan or a motor vehicle or some hobby farm expenses, is for the benefit of members at their retirement?

It is highly likely that the answer to those questions is no and therefore the fund is not being provided for the sole purpose of providing retirement benefits.

That means that the fund becomes non-complying.  It could also mean that the trustees are liable to pay penalties personally and quite substantial ones.

It is not easy always to determine whether something is for the sole purpose of retirement benefits, but one example recently was decided on the basis that the provision of rental income was on non arms length terms to the member's son.

 

Source:  Written for AcctWeb by a Melbourne accounting firm

 


All the world’s a stage, and all the men and women are merely players William Shakespeare
A fool and his money are soon parted. What I want to know is how they got together in the first place Cyril Fletcher
My main problem is reconciling my gross habits with my net income Errol Flynn
All I ask is the chance to prove that money can't make me happy Spike Milligan
A very rich person should leave his kids enough to do anything but not enough to do nothing Warren Buffet
Next to being shot at and missed, nothing is quite as satisfying as an income tax refund F.J. Raymond
Those are my principles, and if you don't like them... well, I have others Groucho Marx

© 2018 Moneytax. All rights reserved. Disclaimer | Privacy

Site by PlannerWeb.