ATO ends tax-avoidance uncertainty
By Craig Phillips
The Australian TaxationOffice (ATO) has reassured financial planners and investors by indicating commonly-used superannuation strategies will not attract anti-avoidance provisions under the Income Tax Assessment Act.
Advisers and their clients had been concerned their super re-contributions could invoke the wrath of the ATO, but Tax Commissioner Michael Carmody says the ATO has now moved to clarify the situation.
“We have examined a number of straightforward strategies and confirm that they will not attract the general anti-avoidance provisions. Under the law, there is a certain amount of flexibility and choice about when and how people draw on their super savings,” Carmody says.
Individuals will be allowed to withdraw an eligible termination payment (ETP) from their super fund and then re-contribute the same or a similar amount shortly after to the same fund for the purpose of commencing a superannuation pension.
The same will apply in similar situations such as when a person commences a pension in the year or years following that in which the ETP was paid, or when the re-contribution is made to a fund other than the one that paid the ETP.
“The strategies and variations we have examined so far are arrangements to maximise an individual’s retirement benefits and are allowable under law,” Carmody says.
The ATO will release a public ruling in the next few months after talks with the industry.
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