ATO extends deadline for Personal Services Income diverted into SMSFs

The ATO has extended the deadline for SMSFs receiving diverted personal services income to come forward and have some penalties remitted.

The ATO had previously said that SMSFs involved in such arrangements that came forward before 31 January 2017, and weren’t already subject to ATO compliance action, would have administrative penalties remitted in full, though shortfall interest changes would still apply. This deadline has been extended to 30 April 2017, in part due to the recent passage of substantial pieces of superannuation legislation.

“The due date to contact us in relation to TA 2016/6 has been extended to 30 April 2017,” said the ATO.

“We are aware there have been many superannuation changes since July 2016 including extensive superannuation reforms enacted in November 2016. SMSF trustees and advisors have been required to understand how those changes impact their funds and to address them.”

The ATO also notes that SMSFs with LRBAs may have been focused on the recent deadline to ensure that such arrangements are on an arm’s length basis.

“As people may not have had sufficient time to consider the voluntary disclosure offer for personal services income, we have extended the opportunity to contact us without facing administrative penalties,” said the ATO.

“If any of your clients have entered into an arrangement as described in TA 2016/6 or a similar arrangement, please contact us so we can work with your client to resolve any issues in a timely manner, and minimise the impact on the individual and the fund.”

“We recognise the importance of preserving the assets which SMSFs hold to fund retirement incomes, so issues affecting the SMSF will be addressed on a case-by-case basis. We anticipate that, in most cases, the personal services income distributed to the SMSF by the non-individual entity would be taxed to the individual at their marginal tax rate.”

Details on how to contact the ATO in regards to this matter are available here.

Extension gets “thumbs up” from SMSF Association

The SMSF Association has welcomed the three month extension by the ATO.

Peter Hogan, SMSF Association Head of Technical, said: “The Association encourages all SMSF professionals and trustees to consider carefully all their investments and arrangements with all parties, whether related or not, for compliance with the superannuation and tax laws as well as any other relevant legislation.”

“They should also revisit TA 2016/6. The Association encourages all SMSF professionals to revisit this alert to review its potential impact on their SMSF clients,” he said.

“In addition, consideration should be given to disclosing any arrangements that give any concern in order to take advantage of this ATO extension deadline.”

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