ATO issues SMSF tax warning

 

The tax office has warned it is reviewing arrangements where individuals divert their personal services income to a self-managed superannuation fund to minimise or avoid tax.

 

Deputy commissioner James O'Halloran said these types of arrangements are typically used by SMSF members at or approaching retirement age as income received by the SMSF trustee is concessionally taxed or treated as exempt current pension income of an SMSF in pension phase.

This, he said, means the SMSF owner effectively avoids paying tax on their income at the marginal tax rate.

"Under these arrangements an individual performs services for a client for which the individual does not directly receive adequate remuneration for the service provided," Mr O'Halloran said.

"Instead the client refers remuneration for the service to a company, trust or other non-individual entity. The entity then distributes the income to an SMSF, of which the individual is a member, as a return on investment.

"We are currently reviewing a number of SMSFs that may be involved in this arrangement and will continue to engage directly with taxpayers and their advisers where we have concerns," Mr O'Halloran added.

The ATO has encouraged taxpayers who plan to enter or have entered into this type of arrangement to seek a private ruling or make a voluntary disclosure. They should also seek independent advice from an adviser not involved with the arrangement, the tax office said.

STAFF REPORTER -
Monday, 02 May 2016
www.accountantsdaily.com.au


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.