Australian Executor Trustees senior technical services manager Julie Steed said it is very important that practitioners communicate to their clients that the record keeping for the CGT relief is not just till the date that the fund lodges its tax return for 2016-17, but potentially up to 10 or even 20 years into the future.
“If it’s a listed share it probably won’t be that difficult to obtain the value, because you can go back into past ASX records and look at what the price was on that day, although if you don’t have those records on hand it can be time-consuming,” said Ms Steed.
For a lot of private assets, however, making sure that those valuations are tightly locked down and kept securely for the entire period between 1 July 2017 and the time in which the fund actually sells the asset will be critical, she stressed.
Cooper Partners director Jemma Sanderson said while most software systems are pretty good when it comes to maintaining these sorts of records, its important that the fund has records on what assets the relief was claimed on and what the CGT relief cost base is.
“There’s the purchase price that the fund paid for the particular asset which the fund will maintain, but then you’ve got the tax cost base which will be different to that, so that will be the reset amount, and it’s going to be really important to maintain that,” Ms Sanderson explained.
She also noted that the disclosures to claim the relief in the annual return within the CGT schedule aren’t particularly onerous, and because of the way that they operate, if someone picked it up later and looked at it, they may not necessarily be able to see what happened if they just looked at the annual return or the financial statements.
“So SMSF trustees really need to keep good records, good minutes and resolutions to show exactly where the relief was claimed and the outcome of that, because it might be okay where that practice maintains that client for the whole term, but in a situation where you pick up a new client, that a different firm has done it could be difficult,” Ms Sanderson said.
It is also important, she said, that the final amounts that are in each member’s pension account and the different tax components are confirmed in the records of the fund as well.
“It’s really important that you’ve got all that paperwork in place in the permanent records of the fund. Relying on the software is perfectly fine, and that will maintain all the numbers, but it’s also really important that we’ve got that additional paperwork sitting there,” Ms Sanderson said.