There are important takeaways for trustees and practitioners in the Federal Court case which is seeing former NAB boss Don Argus appeal against an ATO decision to increase the taxable income of his SMSF.
Documents filed in Melbourne’s Federal Court indicate Mr Argus and his wife are appealing against an ATO decision to increase the taxable income of the Alamiste Superannuation Fund of which the couple are trustees, the Australian Financial Review reports.
“The applicants apply to have … the taxable income of the fund for the income year ended 30 June, 2010 [reduced] by $1,176,991 from $2,251,071 to $1,074,080 or to such other amount as the court orders,” stated the notice of appeal.
Speaking to SMSF Adviser, The SMSF Professionals’ Association of Australia’s Graeme Colley explained SMSFs that are in pension phase are obliged to make minimum payments each year.
It appears in the case of Mr Argus’ SMSF, the fund has not met the minimum requirements, and therefore its income was taxed at 15 per cent, Mr Colley said.
Although this rule seems relatively simple, Mr Colley said it’s “surprising” the number of trustees that misunderstand how it works.
However, Mr Colley said there are relatively simple strategies a trustee and their adviser can put in place to prevent the recurrence of this issue, including introducing an automated system where the minimum pension amount is paid automatically.
“It’s so simple. Particularly these days with the way in which you can set up your bank accounts electronically, just have that transfer over to your personal bank account,” Mr Colley said.
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