SuperConcepts SMSF Regulatory Update. Philip La Greca SuperConcepts

Transcription

1 SuperConcepts SMSF Regulatory Update Philip La Greca SuperConcepts

2 SMSFs Regulatory Update March 2016

3 What we will cover ATO integrity measures Buy/sell agreements Dividend stripping Related Party Loans (LRBA) Lump sum payments from a TRIS SMSFs with Collectables UK pension transfers SMSFs Regulatory Update (March 2016) 3

4 Buy/sell agreements ATO ID 2015/10 Life insurance Death benefit Brother 1 Brother 2 Company co owners Spouse s inherited share of the company Spouse SMSFs Regulatory Update (March 2016) 4

5 Buy/sell agreements ATO ID 2015/10 Insured amount not based on the future needs of the member s spouse Agreement influenced the decision of the trustees would not have been purchased otherwise Not a death benefit, just compensation for an expected inheritance Non-member brother receives a personal benefit which is not incidental. = Breach of the sole purpose test SMSFs Regulatory Update (March 2016) 5

6 Buy/sell agreements Views expressed in ATO ID 2015/10 rest on the particular facts of the case Pure presence of a buy/sell agreement would not automatically lead to a breach of the sole purpose test ATO web guidance material to be updated The decision to purchase life insurance must not be a condition and consequence of a buy/sell agreement The existence of a buy/sell agreement must not influence the trustee s decision to favour one course of action over another Buy/sell agreement a mere incidental benefit Insured amount based on the future needs of beneficiaries? SMSFs Regulatory Update (March 2016) 6

7 Dividend stripping TA 2015/1 Alert issued on 30 April 2015, updated alert issued on 29 October 2015 Cash + franking credits (Reg 13.22C) Private company NCC contribution Shares owned by Individual shareholder or a trustee of a family trust Contribution or sale of shares SMSF Franked dividends flow to the SMSF SMSFs Regulatory Update (March 2016) 7

8 Dividend stripping S177E of the ITAA 1936 Distributions of company profits paid as a dividend which would have been included, or might reasonably be expected to have been included, in the assessable income of a taxpayer The amount of the notional tax benefit included in the assessable income of the taxpayer Self-amend or voluntary disclosure offer until 15/2/2016 no admin penalties levied but interest charges may still apply ATO will apply main anti-avoidance provisions to these arrangements going forward. SMSFs Regulatory Update (March 2016) 8

9 Dividend stripping Dividend stripping + LRBA = shares not held at risk for required 45 days Franking credits disallowed Remaining assets of the private company (cash + franking credits) + LRBA means diminished risk of loss and opportunity for gain (delta < 0.3) Distinction drawn between LRBAs used to acquire private versus public company shares. SMSFs Regulatory Update (March 2016) 9

10 Dividend stripping key messages Essence of the arrangement all important If its to direct dividend income and attached franking credits from a private company to an SMSF instead of another entity, expect ATO scrutiny. An ATO public guidance product likely to be issued to explain how tax and super laws apply to arrangements with features similar to those in TA 2015/1 SMSFs Regulatory Update (March 2016) 10

11 Related party loans (LRBA) SMSF trustees strongly encouraged to take steps to ensure related party loans are on terms consistent with an arm s length dealing by 30/6/16 Interest payments must reflect commerciality for the current financial year 2015/16 Other conditions such as Loan to Value Ratio (LVR), term and interest only v principal & interest must be commercial by 1/7/16 No compliance action if the trustees takes appropriate action by 30/6/16 Uncertainty and a lack of clarity about terms that are consistent with an arm s length dealing SIRN sub group formed to develop a proposal on the appropriate parameters that may be used to determine whether an LRBA is consistent with an arm s length dealing SMSFs Regulatory Update (March 2016) 11

12 Safe harbour work in progress Benchmark interest rate Division 7A? (2014/15 = 5.95%, 2015/16 = 5.45%) Maximum LVR 70%? Term of loan Personal guarantee Frequency of repayments 15 years? Yes/No At least annually? Security A registered mortgage SMSFs Regulatory Update (March 2016) 12

13 TRIS private ruling Elect to have TRIS payment not treated as a super income stream benefit for the purposes of the ITAA 1997 If under age 60, entitled to a tax offset 0% on the amount within the low rate cap, versus being taxed as a super income stream benefit 2009 NTLG minutes (initial ATO view), revised in TR 2011/D3 but only in context of partial commutations ATO SMSF article (11/1/2016) in line with private ruling but added: Must satisfy 10% TRIS annual payment limit Payment must not be paid by an in-specie transfer May effect the amount of the fund s ECPI. SMSFs Regulatory Update (March 2016) 13

14 Collectables & Personal Use Assets Transitional period for collectables held at 30/06/11, ceases 30/06/16 Must comply with specific requirements Can t lease an asset to a related party Can t store an asset at the private residence of a related party A related party can t use the asset Assets sold to a related party must be valued by independent qualified valuer Asset must be insured in fund s name within 7 days Opportunity to transfer asset out of fund to related party No requirement for independent qualified valuer if prior to 1/7/16 SMSFs Regulatory Update (March 2016) 14

15 UK pension transfers Recognised Overseas Pension Schemes (ROPS) Formerly QROPS In mid August 2015, HMRC commenced issuing ROPS numbers again to Australian super funds who restrict membership to those age 55 and above. Over 100 funds back on list Only 5 appear to be non SMSFs Registration & reporting requirements Tax consequences of transfer SMSFs Regulatory Update (March 2016) 15

16 What you need to know This presentation may contain advice. Any advice is of a general nature only and may contain advice that is not based on your clients personal objectives, their financial situation or needs. Accordingly you should consider how appropriate the advice is to your clients personal objectives, financial situation or needs. Any advice in this presentation is provided by Australian Securities Administration Limited (ASAL), ACN , AFSL No which is part of the AMP group of companies. AMP companies receive fees and charges in relation to their financial products as set out in the product disclosure statement. AMP employees and directors receive salaries, bonuses and other benefits from the AMP group. 16

17 Thank you Any questions? 17