ATO issues alert on share ex-div date structured arrangements

The ATO warned it is reviewing certain structured arrangements that involve the transfer of shares around the shares’ ex-dividend date.

“We are concerned these arrangements involve taxpayers inappropriately receiving franking credits in breach of rules designed to maintain the integrity of the imputation system,” said the ATO.

According to Taxpayer Alert (TA) 2018/1:

The arrangements involve an Australian taxpayer with a long position in Australian shares legally acquiring, but having little or no economic exposure to, an additional parcel of the same shares and holding those shares over the ex-dividend date. They will typically involve the use of securities lending arrangements in combination with, repurchase agreements or derivative contracts (contracts), to create what is essentially a circular flow of shares. Although the Australian taxpayer has no or only nominal economic exposure to the additional parcel of shares on a stand-alone basis, the Australian taxpayer claims franking credits in respect of both the existing long position and the additional parcel of shares. Read more...

ATO to not impose some FTL on time penalties following IT issues

The ATO has announced that it will not be imposing Failure To Lodge (FTL) on time penalties for some reporting obligations, following from recent IT issues.

The ATO said it acknowledges the affect that “our systems incidents” have had. “We know you have been inconvenienced and need space to catch up without the need to deal with the imposition of penalties,” said the ATO statement announcing that some FTL penalties would not be applied:

Failure to lodge (FTL) on time penalty will not be imposed for tax returns and all activity statements due to be lodged from December 2016 to the end of August 2017, where lodgment is received by 31 August 2017. This applies to the following obligations: Read more...

ATO to be flexible on compliance with death benefit cashing rules: PCG 2017/6

The ATO will take a flexible compliance approach to industry practice around the cashing of superannuation death benefits prior to 1 July 2017.

The impending introduction of the Transfer Balance Cap has highlighted an issue with the treatment of superannuation death benefits, which the ATO has addressed in Practical Compliance Guideline 2017/6 superannuation reform: commutation of a death benefit income stream before 1 July 2017.

The ATO notes, in the PCG, that when a super fund member dies the super fund is required to cash that member’s super interest to their beneficiaries or legal personal representative as soon as practicable. For a dependant beneficiary the death benefit can be cashed by lump sum, death benefit income stream or a combination of the two. Read more...

SMSF property development and joint ventures an emerging issue for ATO

SMSFs being involved in property development and business ventures, including as part of a joint venture, is an emerging issue identified by the ATO.

“We have found a small number of cases recently whereby SMSFs have become either directly or indirectly involved in business undertakings, commonly property development enterprises,” said ATO Assistant Commissioner for Superannuation, Kasey Macfarlane.

“An SMSF can undertake a property development or other business venture. However, significant caution is required because the manner in which these activities are undertaken can give rise to breaches of regulatory rules under the Superannuation Industry Supervision Act 1993 (SISA) and the Superannuation Industry Supervision Regulations 1994 (SISR).” Read more...

ATO busts myths around 1 July 2017 superannuation changes

The ATO has busted five ‘myths’ around the superannuation changes applying from 1 July 2017.

ATO Deputy Commissioner for Superannuation, James O’Halloran, told a CPA conference that he wanted to “clarify some misconceptions” about the changes to super legislated late in 2016.

Myth 1: SMSFs have to report to the ATO on 1 July 2017

“There is a myth that SMSFs will have to report their member account balances to the ATO on 1 July 2017. This is not the case,” said Mr O’Halloran.

“The ATO does not require SMSFs to report their members account balances and values of any income streams on commencement of the super changes on 1 July 2017.” Read more...

SMSFs may have to start reporting more frequently, says ATO

SMSFs may have to start reporting more frequently, including ‘event based reporting’, says the ATO.

James O’Halloran, ATO Deputy Commissioner for superannuation, told the SMSF Association National Conference that the changes legislated in 2016 creates a need for “clearer and timelier understanding of assets and values” in SMSFs.

“The current SMSF business model built around an inherent lag in end of year reporting is going to significantly limit opportunities for clients. Our consultation processes have been discussing potential alternate reporting solutions,” he said. Read more...

ATO to survey SMSFs on use of LRBAs to acquire assets

The ATO will be contacting some SMSFs to conduct a survey on the use of LRBAs to acquire assets.

“In November 2016, we are contacting some self-managed super fund (SMSF) trustees to participate in a survey about the use of limited recourse borrowing arrangements (LRBA) to acquire assets for their SMSF,” said an ATO statement.

“We are conducting this survey as part of research to learn more about SMSFs’ use of LRBAs. Participation is voluntary and responses will remain anonymous. The information gathered from the survey will not be used for compliance purposes.” Read more...

SMSF audit quality and cost to be a focus for the ATO in 2016/17

ATO compliance focus 2016/17, SMSF audit quality and cost, low-costThe ATO will be taking a close look at SMSF audit quality, and cost, as part of its 2016/17 compliance program.

“A key component of our program of work for 2016-17 is directed towards reviewing audit quality, with a focus on ‘low-cost auditors’,” James O’Halloran, ATO Deputy Commissioner Superannuation, told the CPA Australia National SMSF Conference.

“This follows industry concerns about whether the quality of audits from some low-cost providers is sufficient to meet industry standards.” Read more...

Super Scheme Smart: “if in doubt, check it out,” says ATO

Australian Taxation Office, ATO, superannuation, SMSF, retirement, project Super Scheme SmartThe ATO has launched project Super Scheme Smart, encouraging people to “if in doubt, check it out” when approached with a superannuation scheme.

“Each year we discover complex tax schemes and arrangements designed by promoters solely for the purpose of helping people avoid tax,” says the ATO.

“Currently we are seeing a number of schemes targeting Australians planning for their retirement. These schemes encourage individuals to channel money inappropriately through their self-managed superannuation fund (SMSF). We have launched Project Super Scheme Smart to educate taxpayers and their advisers about these types of schemes – so they know what to look out for.” Read more...

ATO SMSF early engagement and voluntary disclosure service

ATO, SMSF early engagement and voluntary disclosure service, SMSF compliance, Auditor Contravention ReportThe ATO is preparing to implement a process for SMSF trustees and professionals to report and resolve compliance issues, called the ‘SMSF early engagement and voluntary disclosure service’.

“In response to feedback we received from SMSF trustees and advisers, we are developing an early engagement and voluntary disclosure service, so you can be put in contact with people in the ATO who can help you with complex SMSF issues, and where appropriate, to help you rectify SMSF regulatory breaches,” says the ATO. Read more...