The Australian Taxation Office (ATO) has flagged that it will be specifically reviewing the top 100 ranked self-managed superannuation funds (SMSFs) by total assets, looking at whether they are using tax avoidance strategies.
The ATO’s deputy commissioner for superannuation, James O’Halloran has told an accountants’ forum that the ATO will be specifically looking at non-arm’s length income, dividend stripping and structured tax arrangements designed to avoid tax.
“We will do this to ensure the money moving into the fund is taxed at the appropriate point and trustees are not gaining inappropriate access to concessional tax treatment unavailable outside the super environment,” he said.
O’Halloran made clear that the ATO’s scrutiny was based on the 2017 $1.6 million Transfer Balance Cap (TBC) changes and said that advisers needed to be mindful of the regulatory and income tax risks that arose from particular planning arrangements, “many of which may appear attractive in light of the new caps and limits brought in from 1 July 2017”.
“Our program of work examining dividend stripping cases is ongoing and we will renew our focus on any emerging behaviour as a result of the recent reforms,” he said.
The deputy commissioner pointed out that where wrongdoing had been identified a number of trustees have been removed, some funds had lost their complying status and arrangements had been unwound in a significant number of cases.