Clock ticking for SMSFs to apply transitional CGT relief

Time is running out for some SMSFs to apply transitional CGT relief, says the SMSF Association.

CGT relief for some SMSFs was included in the tax changes from the 2016 Federal Budget, which created the Transfer Balance Cap and removed the Exempt Current Pension Income tax concession for funds with Transition to Retirement pensions.

“Some SMSF trustees have a false belief that CGT relief can be applied for at any stage during this financial year; this is simply not the case,” said SMSF Association CEO John Maroney.

“Trustees of a complying SMSF must make an election for CGT relief to apply in the approved form contained within the CGT schedule of their 2016-17 SMSF income tax return,” he said.

“The irrevocable election for CGT relief must be made on or before the day a trustee is required to lodge the fund’s 2016-17 income tax return, and for some trustees that is just weeks away, on 31 October 2017.”

Maroney said the Association is concerned that SMSF trustees might not be aware of the approaching deadline, especially if they aren’t receiving specialist advice.

“The fact is the tax return lodgment date for the 2016-17 financial year for SMSFs where one or more prior-year tax returns are outstanding at 30 June 2017 is 31 October 2017.”

“If trustees of such SMSFs don’t make a CGT relief election by this date by lodging their SMSF return on time, they could miss out on CGT relief and potentially thousands of dollars in tax savings.”

Feedback received by the SMSF Association indicates that confusion remains around the implementation of the CGT relief transitional rules.

Maroney said that trustees who believe they may be eligible for the CGT relief would be “well advised” to seek specialist advice.

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