SPAA questions ATO insurance ruling
The technical director of the Self-Managed Super Fund Professionals' Association of Australia (SPAA), Peter Burgess, has questioned a public ruling by the Australian Taxation Office (ATO) that trustees should consider the proportions of super contributions when offering insurance cover.
In the draft ruling, which was issued late in 2009, the ATO said super trustees should consider factors such as the proportion of super contributions used to purchase insurance cover.
The ATO indicated an "unreasonable" diversion of contributions towards the purchase of life insurance would be difficult to reconcile with the sole purpose test.
Speaking at the SPAA conference in Melbourne, Burgess questioned whether the ATO was telling trustees they had an obligation to monitor and restrict the amount of insurance cover self-managed super fund clients could take out based on the contributions that the client was making into the fund.
Burgess said SPAA was unsure what the ATO was “trying to say” with the draft ruling and it was seeking clarification.
“You can see the flow on effect ... where the only investment is a life insurance policy,” Burgess said.
“We would like to see how that is consistent with some of the other structures out there,” Burgess said.
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