This workshop will use case studies to explore some of the unique SMSF issues that may arise through investing via unit trusts including:

As previously discussed here, the May 2021 budget announcements included a number of changes aimed at increasing flexibility in the superannuation system. Some of these key changes have now been introduced to Parliament as part of the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021 (Bill).

A common misconception is that it is compulsory under the law for employers to make superannuation contributions on behalf of their employees.

On 27 September 2021 the government released exposure draft legislation to introduce a retirement income covenant (Draft Bill).

As part of the broader ‘Your Future, Your Super’ reforms, the concept of default ‘stapled super funds’ for employees will take effect from 1 November 2021. Where employees start work on or after 1 November 2021, and do not choose a super fund, most employers will have to check with the ATO if their employee has an account with an existing super fund, known as a ‘stapled super fund’, to pay the employee’s super guarantee into.

In the recent decision of Allen and Commissioner of Taxation (Taxation) [2021] AATA 2768 (6 August 2021), the Australian Administrative Tribunal (the Tribunal) overturned a private ruling of the Commissioner of Taxation (Commissioner) and found that an individual taxpayer was personally carrying on a business of managing rental properties.

SMSFs (self managed superannuation funds) have been carrying on property development activities ever since SMSFs came into existence. Yet despite that there is still a common concern that such activities will cause the SMSF to become non-compliant, or subject to penalties, on the basis that such activities, and in particular undertaking a property development business, are prohibited.

Key learnings from ATO Determinations

The non-arm’s income rules, or NALI, have been around for decades. Despite that, historically, they have been rarely invoked by the ATO and largely ignored by many advisors and trustees.

The super guarantee (SG) amnesty ended on 7 September 2020. The SG amnesty allowed employers to disclose and pay previously unpaid SG charge, including nominal interest, for the quarters between 1 July 1992 to 31 March 2018 without incurring the administration component or Part 7 penalties. In addition, payments of SG charge made to the ATO under the amnesty were tax deductible to the employer.

After seeking advice from an independent advice panel, the ATO has released its finalised Law Companion Ruling setting out the ATO view on the non-arm’s length expenditure (NALE) amendments to section 295-550 of the Income Tax Assessment Act 1997 (ITAA97), LCR 2021/2. In addition, the ATO has amended its contribution tax ruling TR 2010/1. The final LCR and amendments to TR 2010/1 partially soften the ATO views on the application of NALE.

The Bill which increases the maximum allowable number of members in an SMSF to six (the current maximum is four members) has passed both houses of Parliament and is now law. From 1 July 2021, SMSFs can now have anywhere between one to six members.

In the recent decision of Olias Pty Ltd as trustee for the Storer Family Trust and Commissioner of Taxation, the Administrative Appeals Tribunal (AAT) found that a “contract” music teacher fell within the ordinary definition of ‘employee’, and was therefore an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (Cth) (SG Act).

The 2021 Budget contained a number of exciting (and some unexpected) announcements regarding changes to superannuation. As the changes are mostly aimed at increasing flexibility and the ability of older Australians to contribute towards retirement, this is positive news for SMSFs.

Upon the death of a member of a self managed superannuation fund (SMSF), the member’s benefits in the SMSF must be cashed ‘as soon as practicable’ after the member dies under regulation 6.21(1) of the Superannuation Industry (Supervision) Regulations 1994.

Cases on the making of self managed superannuation funds (SMSFs) non-compliant are relatively rare. Issuing a notice of non-compliance is one of the most severe penalties available in an SMSF context, given the taxation implications

Some of the key superannuation rates and thresholds, including the contribution caps and transfer balance cap, will increase from 1 July 2021.

As previously discussed here, the definition of non-arm’s length income (NALI) under the Income Tax Assessment Act 1997 was amended in mid-2018 to include non-arm’s length expenses or NALE. NALE includes not just an expenditure, but also a loss or outgoing that is lower than an arm’s length amount, and also includes where there is a nil amount (ie, no expenditure).

As discussed here, as part of the ATO COVID-19 administrative concessions, the ATO announced that temporary repayment relief could be offered for limited recourse borrowing arrangements (LRBA) loans. The repayment relief must reflect similar terms to what commercial banks offered for real estate investments loans as a result of COVID-19.

As discussed here and here, the decisions in Re Narumon [2019] 2 Qd R 247 and Re SB; Ex Parte AC [2020] QSC 139 made it clear (at least in Queensland) that:

On 1 March 2021, the Australian Taxation Office (ATO) released Draft Practical Compliance Guideline PCG 2021/D2 Allocation of professional firm profits – ATO compliance approach (Draft PCG) that sets out the ATO’s proposed compliance approach to the allocation of profits by professional firms.