Draft law on some Budget measures

An exposure draft of the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 has been released for public consultation, along with proposed accompanying regulations. This exposure draft law deals with certain measures announced as part of the 2016-17 Federal Budget relating to:

 deductions for personal contributions

 tax offsets for spouse contributions

 low income superannuation tax offset, and

 contribution rules for people aged 65 to 74 years. The deadline for comments to be made to Treasury on the proposed law was 16 September 2016. We will continue to follow the progress of the exposure draft.

Government’s superannuation reform policy revised

In addition to the developments on the 2016-17 Federal Budget announcements relating to superannuation, on 15 September 2016, the Government announced a revision of some of its previously announced superannuation reforms. Specifically, the Government announced that:

 the originally proposed $500,000 lifetime nonconcessional cap will be replaced by a new measure to reduce the existing annual nonconcessional contributions cap from $180,000 per year to $100,000 per year, and

 individuals with a superannuation balance of more than $1.6 million will no longer be eligible to make non-concessional contributions from 1 July 2017.

Further details of these measures and the other proposed superannuation reforms are available on the Treasury website.

Refer to our feature article, Superannuation: where are we since the 2016-17 Federal Budget? for a snapshot of the status of all currently proposed reforms to superannuation.

United States Investment – related party debt

In the May edition of TaxTalk Monthly, we noted that the United States (US) Treasury had proposed regulations relating to interest deductions on related party debt. Given the potential for impact on the US investment structuring options for Australian superannuation funds, we have followed up with a paper describing the application of these regulations in greater detail. For further information, see PwC Tax Insights.

ATO’s risk and review focus for superannuation funds

The Australian Taxation Office (ATO) has stated its areas of risk and review focus for superannuation funds in a presentation delivered by James O’Halloran (Deputy Commissioner of Superannuation) and Peter O’Reilly (Assistant Commissioner of Public Groups and International) at the TIA National Superannuation Conference on 25 August 2016.

In a consistent theme with previous statements by the ATO, the income tax areas to receive ATO focus include tax governance, quality assurance for third party data, foreign income tax offsets, deductibility of certain types of expenses, international investment structuring, and isolated or significant transactions.

While the areas of focus for the ATO are reasonably consistent with prior statements, the ATO’s review activity has certainly escalated in recent times. Funds should review this list of focus areas carefully and consider how they are placed in each case.