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. Read more...

TA 2016/6: directing personal services income into an SMSF

The ATO has issued a Taxpayer Alert for arrangements involving personal services income being directed into an SMSF: TA 2016/6.

“We are currently reviewing arrangements where individuals (typically self-managed superannuation fund (SMSF) members at or approaching retirement age) purport to divert income earned from their personal services to a SMSF to minimise or avoid tax on their income,” says the alert.

TA 2016/6 describes arrangements where an individual performs services, but with the consideration for these services going to a company, trust or other type of entity. This entity then distributes the income to an SMSF, of which the individual is a member. The SMSF treats this money as investment income, subject to a concessional rate of tax or as Exempt Current Pension Income (ECPI). Read more...