While the ATO’s latest round of post-reform guidance has provided further clarity on the CGT relief and transfer balance cap, there remain some uncertainties around the application of Part 4A, among other technical details.
SuperConcepts’ Peter Burgess says while the Law Companion Guide (LCG) 2016/8 released by the ATO last week provided the industry with further details on the operation of the CGT relief in relation to TRIS, there are a few areas requiring further attention.
One thing the SMSF industry was hoping to see, Mr Burgess said, was a solution to the issues arising from an unsegregated fund becoming a segregated fund between the 9 November 2016 and I July 2017, and the impact that has on their ability to claim CGT relief.
“So you could have started off with a husband and wife, one in the accumulation phase, one in the pension phase, and then prior to 1 July 2017 that other member moves into the pension phase as well. By default you’ve then got a segregated fund and you’ve compromised that fund’s ability to claim CGT relief,” he said.
“We were hoping to see some sort of work around to that, to allow individuals in those sorts of scenarios to still be eligible or some sort of legislative concession to allow those types of individuals to be eligible. Unfortunately, there wasn’t any in there.”
Mr Burgess said there is also a need for further guidance on how Part 4A will be applied and some of the scenarios that would be of concern to the ATO.
“They have said that they’re not concerned about people starting pensions after the 9th of November, but they would have concerns if commutations are made shortly after that,” he said.
“We’ve always know that’s an issue for people, starting pensions and then very soon after making commutations out of those pensions. We were probably hoping for a bit more guidance on those types of scenarios [though].”
In reference to LCG 2016/9 Superannuation reform: transfer balance cap, Perpetual’s Colin Lewis told SMSF Adviser he is hoping the ATO will address an outstanding insurance issue.
In what Mr Lewis believes is an accidental oversight, materials have suggested some insurance benefits are not being counted towards a member’s cap, which he expects should be corrected or clarified by the ATO.
“Say, you’re in the pension phase, you’ve got a reversionary pension, the pension automatically continues … it’s unlikely but some people may have insurance proceeds coming through, then that’ll just form part of your pension balance, but it won’t actually count towards your transfer balance cap. So, therefore, it’s a free kick in some ways and I’m sure that’s not the intention,” he said.
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