ATO’s new SMSF advice and guidance product

The Australian Taxation Office (ATO) has created a new public advice and guidance product specifically for self-managed superannuation fund (SMSF) trustees and their advisors - SMSF Regulator’s Bulletin (SMSFRB). The Bulletins will outline the ATO’s concerns about new and emerging arrangements that pose potential risks to SMSF trustees and their members from a superannuation regulatory and/or income tax perspective.

The first SMSFRB issued by the ATO is about the use of reserves by SMSFs. According to SMSFRB 2018/1, the use of reserves by SMSFs outside limited and legitimate circumstances may suggest that the reserves are being used as part of a broader strategy to circumvent current restrictions imposed by superannuation and income tax legislation. This may include attempts to reduce an individual’s total superannuation balance or transfer balance account. The ATO will closely scrutinise arrangements where amounts within an SMSF are held in a reserve as opposed to being allocated directly to a member’s superannuation interest. The ATO will consider whether the trustee is acting in accordance with their obligations under the Superannuation Industry (Supervision) Act 1993 (such as meeting the sole purpose test) and the general anti-avoidance provision in the income tax law.

Journey through reform for ATO and APRA superannuation funds

In a speech recently, ATO Deputy Commissioner James O’Halloran discussed the journey of super reform, the importance of continued engagement with the superannuation sector and the road ahead.

In the coming weeks, the ATO expects to release its annual ATO APRA Fund Diagnostic Report. It will hold a webinar in April 2018 with fund trustees and administrators to discuss the diagnostic report and overall results for the industry, as well as executive-level led meetings with key clients’ fund executives. It was also indicated that the ATO is planning a small number of information systems risk assessments (ISRAs) and specific issue reviews.

In addition, it was noted that successor fund transfers (SFTs) present a significant risk to the integrity of super fund data and accordingly, a high priority this year is for the ATO to support funds going through not only a successor fund transfer, but also a change in administrator or a change in IT platforms.

Draft superannuation regulations released for consultation

Treasury has released for consultation draft superannuation regulations, which will replace the following regulations approaching their sun-setting dates:

  • Superannuation (Self-Managed Superannuation Funds) Supervisory Levy Imposition Regulations 1991 (1 October 2018).
  • Superannuation (Self-Managed Superannuation Funds) Taxation Regulations 1999 (1 April 2019).
  • Small Superannuation Accounts Regulations 2002 (1 October 2019).

The new regulations make no alteration to the substantive meaning or operation of the existing regulations. However, minor technical changes have been made to adopt current drafting practices and to remove redundant references. Comments were due on 23 March 2018.