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New tax determination impacts pension assets

08 August 2013 — 1 minute read

A new tax determination from the Australian Taxation Office will have implications for SMSF members who own property.

The draft ruling, released for public comment, will prevent SMSFs that are partly in the pension phase and partly in the accumulation phase from holding a property.

The same will also apply to bank accounts, according to AMP SMSF head of policy and technical, Peter Burgess.


This determination is slated to take effect on 1 July 2014, meaning some SMSFs will have to restructure their investments before that date to ensure assets owned by the fund are either entirely in the pension phase or entirely in the accumulation phase.

This will be particularly problematic if the relevant asset is a property, Mr Burgess said.

The measure is to prevent members from transferring assets to the pension phase and then selling the asset shortly afterwards to avoid CGT.

If an asset is “purported to be segregated shortly before disposal” then disposed of in circumstances where a capital gain is claimed to be exempt income, there will be a question over whether it was invested for the sole purpose of helping the fund discharge its liabilities concerning super income stream benefits, the ruling stated.

The ruling also indicated that tax avoidance provisions will apply if an asset is segregated shortly before it is disposed of.

Mr Burgess noted the determination does not define “shortly”.

New tax determination impacts pension assets
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