Lawyer challenges ATO view on two fund strategies

Lawyer challenges ATO view on two fund strategies

Challenge, fight

An industry lawyer has disputed the ATO view that setting up two SMSFs is a Part IVA risk by highlighting the importance of the strategy for estate planning.

Speaking to SMSF Adviser, Argyle Lawyers managing director Peter Bobbin said for estate planning purposes, particularly second marriages, there’s every reason to have two SMSFs, one that’s wholly pension and one that’s wholly accumulation.

“From all the biggest court cases that we’ve seen with super, the single most complained of issue before the Superannuation Complaints Tribunal is death benefits, and the common theme that runs through the vast majority of them is blended marriage relationships,” Mr Bobbin explained.

Having both the accumulation and pension accounts in the one fund, he said, is far more complex, he said. Whereas if the client has two funds, this allows them to have the pension account to pass to their wife, he said, and the accumulation account to pass to children from a first marriage.

“So there are really strong estate planning reasons to splitting your super, [particularly] if you’re an SMSF,” he said.

Mr Bobbin said he therefore disagreed with the ATO view that setting up two SMSFs is a strategy likely to be undertaken purely for tax reasons only and therefore potentially subject to Part IVA.

“The reality is that having a wholly-based pension fund and a wholly accumulation-based super fund, as compared to one super fund with a pension account and a pension account, on a pure like-for-like investment approach, there’s no tax at all that’s dodged. So to me it’s a big furphy,” he said.

Lawyer challenges ATO view on two fund strategies
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