ATO assistant commissioner Kasey Macfarlane says the ATO is concerned by an increasing number of cases of super members deliberately exceeding their non-concessional caps.
It appears that members are using the refunds of excess non-concessional contributions to reduce the taxable components of their benefits.
“There appears to be no reason why a super member would do so other than to generate the potential downstream tax benefit that arises when their super benefit is eventually paid,” Ms Macfarlane told delegates at the SMSF Adviser Technical Strategy Day in Sydney.
Ms Macfarlane warned of the possible application of Pt IVA of the Income Tax Assessment Act 1936 and the general anti-avoidance rules in those particular arrangements.
“This is something the ATO is concerned about, in particular there seems to be no reason a member would undertake that strategy other than to generate those potential downstream tax benefits when their super benefits are eventually paid,” she said.
This sounds like the issue I warned about in my submission on the exposure draft of what became the Tax and Superannuation Laws Amendment (2014 Measures No. 7) Act 2015. The withdrawals aren’t required to come from the superannuation interest that received the contribution.
Does the ATO’s position on Part IVA in this situation have implications for re-contribution strategies?
My understanding of part IVA was that it had to be that tax was the sole and and primary purpose of the transaction for the benefit of the TAXPAYER. As the beneficiary of such action will be the beneficiaries of the taxpayer and the taxpayer making the contribution then can part IVA be applied at all? Would appreciate comments.