Latest News

Hot Issues
spacer
Access to more resources and tools than most websites.
spacer
Tax Return Mistakes
spacer
SMSF advice appetite strong, says ASIC
spacer
Taxpayers confused by Scott Morrison’s $1,080 tax refund
spacer
Common STP set-up mistakes - ATO
spacer
Proposal to hold directors liable for GST set to pierce corporate veil
spacer
September 2019 - vital statistics for Australia
spacer
Tax Commissioner wants to turn black economy to ‘lighter shade of grey’
spacer
Changes to the Private Health Insurance Statement
spacer
Up to 9 in 10 ‘other’ expenses adjusted as ATO reveals dodgy claims
spacer
Downsizer Super Contribution
spacer
Tax payers to receive beefed up tax returns.
spacer
10 top global corporations since 1998
spacer
Catch-up Contributions
spacer
Life Insurance
spacer
Community tip-offs trigger ATO visits
spacer
Australia at a glance
spacer
2019: Tax Time Checklists - Individuals; Company; Trust; Partnership; and Super Funds
spacer
Small business clients need to be ready for STP by 30 September
spacer
Big four firm outlines new financial year checklist for SMSFs
spacer
Alert - Online Share Accommodation
spacer
ATO flashes warning over $7.2bn car expenses claims
spacer
Vital statistics for our great nation.
spacer
3 out of 4 tax dob-ins are about business
spacer
Tax on compensation received for inappropriate advice
spacer
‘Extra care’ crucial in avoiding ATO spotlight this tax time
spacer
ATO clears up FAQs about Single Touch Payroll
spacer
GST reporting: common errors and how to correct them
spacer
LRBAs, guarantees in need of review after property market falls
spacer
Victorian Property Valuation Cycle
Article archive
spacer
Quarter 2 April - June 2019
spacer
Quarter 1 January - March 2019
spacer
Quarter 4 October - December 2018
spacer
Quarter 3 July - September 2018
spacer
Quarter 2 April - June 2018
spacer
Quarter 1 January - March 2018
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
spacer
Quarter 4 October - December 2015
spacer
Quarter 3 July - September 2015
spacer
Quarter 2 April - June 2015
spacer
Quarter 1 January - March 2015
spacer
Quarter 4 October - December 2014
Quarter 2 of, 2015 archive
spacer
SMSFs may be missing out on allowable deductions
spacer
Change to Early Access Rules
spacer
Capital Gains Tax – which year?
spacer
Checklist for Employers Year-end
spacer
Year-end Tax Planning – Small Business
spacer
Year-end Tax Planning – Trusts
spacer
Reminders and Tax Strategies for SMSFs pre-year end
spacer
Year-end Tax Planning – Individuals
spacer
Overtime Payments May Eliminate Claims for Unfair Dismissal
spacer
Tips and traps for acquiring SMSF assets from related parties
spacer
ACCC issues scam warning
spacer
SME Dispute Resolution
spacer
Land Tax – Victoria
spacer
R&D incentives at risk
spacer
ATO adds ‘hot issue’ to its SMSF target list
spacer
Additional Super Contributions Not Appropriate for all
spacer
Issues arising from an underpaid pension
spacer
Salary and Superannuation after the death of an employee
spacer
IPA calls for zero pc tax rate
spacer
Australian Government - Budget 2015
spacer
Budget 2015 - some professional opinions
spacer
Looming end to SMSF Borrowings?
spacer
ATO warns SMSFs on franking credits scheme
spacer
Lump Sum Payments - Employer Reporting
spacer
Small business tax cuts 'not enough', says IPA
ATO adds ‘hot issue’ to its SMSF target list

 

One industry lawyer has revealed the ATO will be homing in on one area that has long been “on the audit target list”.

       

The ATO is reviewing SMSF returns that have received discretionary trust distributions, DBA Lawyers director Daniel Butler told SMSF Adviser.

The tax office treats discretionary trust distributions to SMSFs as non-arm’s length income (NALI), which is taxed at the highest marginal rate and recorded at label U2 of the SMSF’s annual return, Mr Butler explained.

“SMSFs will receive an ATO letter asking them to contact the trustee of the distributing trust and review the trust deed and any resolutions to determine whether the amount reported in the annual return is NALI. Based on the review, either an amendment will need to be lodged or a different letter should be used in the CODE box at label 11M of the SMSF annual return,” Mr Butler said.

While many practitioners and trustees are aware of the law relating to discretionary trust distributions, Mr Butler believes problems are arising due to the incorrect completion of tax returns.

“You can know the law, but filling out the boxes to the tax return is like a real science in itself,” Mr Butler said.

Practitioners should be aware both of the law and of the ATO’s increased focus on this area to avoid severe tax implications for clients, he added.

“They also need to look at trust deeds, because a lot of unit trusts are not fixed and therefore they are at risk of being considered NALI,” Mr Butler said.

“Unless you are strictly a fixed trust, you still may technically have a risk under NALI.”

 

Written by Katarina Taurian
Thursday, 28 May 2015

© O'Brien and Partners 2011 - All Rights Reserved | 91 Station Street, Malvern VIC 3144 | Tel: 03 9509 3911 | Fax: 03 9509 3922