The ATO has provided further information on the government’s plan to give the commissioner of taxation statutory remedial power to modify the operation of taxation and super law.
In a statement, the ATO said the statutory powers will aim to provide a “more timely resolution of certain legislative problems” and “flexibility in dealing with certain legislative problems which cannot be resolved by way of interpretation”.
The new powers will also mean “reduced regulatory burden, more certainty and better outcomes for taxpayers”.
Speaking to SMSF Adviser, AMP SMSF’s head of policy, technical and educational services, Peter Burgess, said once the legislation to introduce these powers has been passed, there will be an indication of how individuals can put forward issues that may be resolved through the new mechanism.
There are several scenarios in which Mr Burgess sees the new powers being used.
“One of those is where the government has announced the change to legislation but the change has not yet been enacted and it’s quite common for that to occur,” he said.
“There can be quite a delay between an announcement and when it’s actually brought into law, and that can create some uncertainty for taxpayers.”
The new refunding rules for excess non-concessional contributions are a good example, given that they were announced in last year’s Budget but were not passed into law until this year.
“Once this new power has been granted it can deal with those types of things a lot quicker,” he said.
Mr Burgess said the new powers might also be used where there are “technical inconsistencies in the law resulting in unintended consequences”.
“This will give the commissioner the power to make modifications to the law without going through the full legislative change process,” he said.
Mr Burgess added that he hopes the new powers change the way commissioner’s discretion works in relation to the excess contributions tax.
“Under the current law if someone exceeds their contributions cap they can apply to the commissioner for discretion to have that excess amount either disregarded or re-allocated but it does require the tax payer to show special circumstances exist,” he said.
“Most people in the industry agree that the special circumstance requirement is very onerous and perhaps doesn’t provide the protection that the law was intended to provide in terms of people inadvertently breaching the caps.”
While some may disregard the issue of discretion, given the new refunding rules for contributions, Mr Burgess said SMSF trustees are still better off getting the discretion to have the excess amount re-allocated or disregarded as they avoid having to pay additional charges.
“I think [the new powers] are a good news story for the industry: it’s all about providing more certainty and reducing complexity,” he said.
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