Darren Wynen from TaxBanter and Insyt said he has been hearing from auditors and other SMSF professionals that the transitional CGT relief for TRISs is being almost overlooked in the SMSF annual returns completed so far for 2016-17 financial year.
“Practitioners are disregarding or forgetting that the CGT relief is also available in relation to a transition to retirement income stream of a dollar or more. So we’re just seeing that they’re slipping through the cracks,” said Mr Wynen.
Some practitioners may not be aware that the CGT relief also applies to clients with a TRIS and mistakenly think that it only applies to those clients with superannuation balances above $1.6 million, he said.
The CGT relief for TRISs may be a good opportunity for practitioners to offer additional value to the client, he said, as it’s a one off chance to increase the cost base of an asset to reduce the potential tax payable down the track.
SMSF practitioners, he cautioned, still need to carefully assess the circumstances of the fund to make sure that the client won’t be worse off by choosing the CGT relief.
“If there’s a chance that a fund using the proportionate method in 2016/17 will be fully exempt when the asset is sold then it may be best not to choose the relief, because triggering the relief will cause a tax bill when the sale would otherwise be tax free” he explained.
“We’d still encourage advisers to review their client’s circumstances where they are eligible for the relief [however]. For those clients who have had TRISs where the fund is fully segregated then it may offer a good opportunity to obtain a tax-free cost base uplift in that circumstance.