Reform is needed to address the “inflexible” residency rules which apply to SMSFs, according to AMP SMSF.
Addressing the SMSF Professionals’ Association of Australia national conference in Brisbane yesterday, AMP SMSF’s Peter Burgess said the current residency rules are “not very effective” in ensuring Australian residents benefit from tax concessions in super.
“Let’s hope that as part of the financial sector review the industry will have another chance to push for reforms around the residency rules in SMSFs,” Mr Burgess said. “Certainly, reforms, in my view, are needed.”
“If your client fails the central management control test or the active member test, the penalty is loss of complying status,” he added.
“When you think that the active member test is a very difficult test to understand and it is very difficult to apply, most breaches of the active member test are inadvertent breaches. And the penalty is loss of complying status.”
Mr Burgess also said that as a result of the ATO’s final ruling on when a pension begins and ceases, a more disciplined approach to pensions, particularly in relation to when a pension starts and when a partial commutation request is received, is needed.
“In the past, in some instances, the industry may have been a bit blasé about pension start dates and clients making partial communication elections. However, going forward, and particularly in light of the pension ruling, we can expect the ATO to be taking a close look at these issues,” he said.
However, Mr Burgess added that the SMSF industry’s support for the measure to introduce more flexible penalties for trustees who breach the rules demonstrates the sector’s "maturity".
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
23 Jun 2016Trustees reminded of ‘positive’ CGT news as EOFY loomsBy Katarina Taurian
22 Jun 2017Westpac veteran and SMSF exec set to departBy Staff Reporter
22 Jun 2017ATO sets compliance targets for auditors in 2017-18By Miranda Brownlee
22 Jun 2017CGT relief still plaguing trustees, says former ATO execBy Miranda Brownlee
22 Jun 2017Consultancy firm predicts low take-up of SMSF robo-adviceBy Miranda Brownlee
21 Jun 2017SMSFs warned on timing traps with unit trust transfersBy Miranda Brownlee
- view all
Trustees reminded of ‘positive’ CGT news as EOFY looms
A capital gains tax (CGT) issue that was causing confusion in the industry has been cleared up by the ATO, and professionals are being remin...read more
ATO sets compliance targets for auditors in 2017-18
The ATO will extend its focus on auditor independence in the next financial year, examining the referral sources of audits, and will also sc...read more
CGT relief still plaguing trustees, says former ATO exec
SMSF trustees continue to be under a number of misconceptions in relation to CGT relief in terms of what assets are eligible for the relief ...read more
- view all