Superannuation Alert 26.05.17

Financial Services eBulletin - 26 May 2017

The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.

Type Subject matter Source Description
ATO Allowable deductions for superannuation funds Addendum to Taxation Ruling TR 93/17

On 17 May 2017, the ATO updated the Addendum to Taxation Ruling TR93/17.  This ruling explains "the general principles governing the tax deductibility of expenditure incurred by superannuation funds, particularly for income tax deductions allowable under section 8-1 of the Income Tax Assessment Act 1997".  A link to the consolidated version of the ruling is available here.

  Release of Practical Compliance Guideline PCG2017/6 Practical Compliance Guideline PCG2017/6

On 22 May 2017, the ATO release Practical Compliance Guideline PCG 2017/6: Superannuation reform: commutation of a death benefit income stream before 1 July 2017.  An individual may choose to commute a superannuation income stream that is a superannuation death benefit and roll-over the amount to a self-managed superannuation fund (SMSF) for immediate cashing.  This guideline outlines the "circumstances in which the ATO will not apply compliance resources to review whether a SMSF has satisfied the requirement to cash out a death benefit…where the roll-over occurred prior to 1 July 2017".

  Release of report provided by Inspector-General of Taxation's (IGT) in relation to the ATO's employer obligations audits IGT Review into the ATO’s employer obligations compliance activities - report publicly released

On 24 May 2017, the IGT's report into the ATO's employer obligations audits was released.  A key focus of this review was the "uncertainty associated with the employee/contractor distinction which can lead to misclassification of workers with adverse impacts for all parties".  Overall, the IGT made 11 recommendations two of which were directed to the Federal Government and nine to the ATO.  The ATO has accepted seven of the nine recommendations in full or in part.  The ATO's response is available here. The Government's response is available here.

Treasury updates FoFA Post Implementation Review Treasury media release and Consultation Paper

On 19 May 2017, Treasury announced that it is seeking submissions on a Consultation Paper prepared as part of a "Post Implementation Review" of certain measures introduced as part of the Future of Financial Advice (FoFA) reforms.

The measures are: 

  • the ban on up-front and trailing commissions and like payments for both individual and group risk insurance within superannuation; 
  • the requirement for advisers to renew client agreements to ongoing advice fees every two years (opt-in regime); 
  • the ban on soft dollar benefits over $300 per benefit; 
  • the limited carve-out for basic products from the ban on certain conflicted remuneration structures and best interests duty; and 
  • the clarification provided in relation to access to scaled financial advice.

According to the Treasury media release, Treasury is seeking submissions from stakeholders who have been affected by these measures to assist with identifying and assessing the impact and quantifying compliance costs.  

Case update Administrative Appeals Tribunal Review of ATO Decision

On 12 May 2017, the Administrative Appeals Tribunal (Tribunal) handed down its decision in the matter of Pitts and Commissioner of Taxation [2017] AATA 685.
In this matter the Tribunal upheld a decision of the Australian Taxation Office (ATO) not to exercise its discretion conferred under section 292-465 of the Income Tax Assessment Act 1997 (ITAA97) to disregard a superannuation fund member's non-concessional contributions for the purposes of calculating the member's excess contributions tax. The Tribunal held that there were no "special circumstances" to warrant the exercise of the discretion in the case of the member and that the exercise of the discretion would be inconsistent with the stated object of Division 292 of ITAA97


Further information

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