Application of excess non-concessional contributions tax
In Pitts v Commissioner of Taxation, the Administrative Appeals Tribunal (AAT) considered the application of the excess non-concessional contributions tax in respect of a taxpayer that undertook a recontribution strategy for AUD328,000 and where two years later, the taxpayer contributed an additional AUD325,000, thus breaching the non-concessional contribution cap. The AAT affirmed the Commissioner’s objection decision and found there were no ‘special circumstances’ to allow for the exercise of discretion to disregard or allocate the excess non-concessional contributions to another financial year.
Guidance notes for super changes
The Australian Taxation Office (ATO) issued guidance notes, which provide an explanation of the new superannuation changes and actions for taxpayers to undertake before and after 1 July 2017. The guidance notes also include practical examples to identify how the changes apply in different situations.
Addendum to Ruling on income tax deductions for superannuation funds
On 17 May 2017, the ATO issued an addendum to TR 93/17, which deals with deductions available to superannuation funds, including the methodologies that can be applied in relation to the apportionment of certain expenses.
In the addendum, the ATO has included a number of new examples relating to the treatment and apportionment of expenses. These examples provide some insight into the ATO’s view on the treatment of some expenses within a super fund.
The addendum contains subtle changes relating to expenses and the apportionment of expenses. Funds should take these into consideration in determining deductible expenses and how to apportion the expenses between different types of income.
Recent amendments to various superannuation related matters
The Treasury Laws Amendment (2017 Measures No 2) Bill 2017 (which made changes to the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016) was introduced into Parliament on 25 May 2017 and subsequently enacted. This Bill contains several amendments to the new superannuation laws, including changes to the transfer balance caps, capital gains tax relief for superannuation funds, and more.
Key superannuation rates and thresholds for 2017-18
The ATO has released the key superannuation rates and thresholds for the 2017-18 income year.
Retirement Income Streams Review
Treasury has released the Retirement Income Streams Review, which examines the minimum drawdown rates for account-based pension and regulatory barriers to retirement income stream products. Key points of the review include:
· The review found that the current minimum drawdown rates are ‘about right’, and recommended that the Australian Government Actuary review the rates every five years.
· Changes are recommended to the regulatory framework to allow for the development of annuity-style retirement income stream products.
Actuarial Certification Test for Comprehensive Income Products for Retirement
The Australian Government Actuary has released a report which outlines a proposed actuarial income efficiency test to certify that a retirement income product meets the standards required of a Comprehensive Income Product for Retirement (CIPR) (The standards were previously outlined in the Government’s discussion paper released on 15 December 2016). The report also discusses the limitations and the key issues raised by the Actuarial Technical Expert Group during the consultation process.
Superannuation reform: commutation of a death benefit income stream before 1 July 2017
The ATO has released Practical Compliance Guideline PCG 2017/6 which deals with the commutation of a death benefit income stream before 1 July 2017. The Guideline outlines the circumstances in which the ATO will not apply compliance resources to review whether a self-managed super fund (SMSF) has satisfied the requirement to cash out the death benefit where the commutation and roll-over occurred prior to 1 July 2017 and the member of the SMSF was the spouse of the deceased on the deceased's date of death and the superannuation lump sum paid from the commutation is a member benefit for income tax purposes.
SMSF statistical report: January-March 2017
The ATO has released its first quarterly self‑managed super fund statistical report for 2017.