Latest News

Hot Issues
spacer
ATO hit list 2025 – Key Areas Under Review
spacer
Why Succession Planning Matters for Privately Owned and Wealth Groups in Australia
spacer
Benefits of a business plan
spacer
Roles and Responsibilities in a Business Partnership
spacer
Mixing business and pleasure? Be vigilant this tax season
spacer
30 June 2025 - Tax Checklist - Small (and Micro) Business
spacer
3 more GST fraudsters sentenced under ATO’s Operation Protego
spacer
Evolution of Boeing - 1916 - 2025
spacer
ATO - Targeted Areas of Focus 2024-25
spacer
6 ways to improve your business plan
spacer
Benchmarks for small business
spacer
Beware the early lodgment tax trap, CPA Australia warns
spacer
Tax lawyer flags compliance traps with family trusts
spacer
Superannuation on paid parental leave from 1 July 2025
spacer
Tax Time Checklists Individuals; Company; Trust; Partnership; and Super Funds
spacer
Comparison of various Animal Weights
spacer
2025 Tax Planning Guide Part 2
spacer
From 1 July 2025 ATO Interest is no longer tax deductible
spacer
SME confidence and conditions see uptick over Q1 2025, survey reveals
spacer
Depreciation expert urges property investors to leverage tax depreciation
spacer
Buy a business
spacer
Upskilling and self-education costs
spacer
How secure is your super account?
spacer
Freshwater Resources by Country 2025
spacer
Why Might a Lease Dispute Occur?
spacer
2025 Tax Planning Guide Part 1
spacer
$20,000 instant asset write-off
spacer
New Bunnings scam warning
spacer
The Largest Empires in the World's History
Article archive
spacer
Quarter 1 January - March 2025
spacer
Quarter 4 October - December 2024
spacer
Quarter 3 July - September 2024
spacer
Quarter 2 April - June 2024
spacer
Quarter 1 January - March 2024
spacer
Quarter 4 October - December 2023
spacer
Quarter 3 July - September 2023
spacer
Quarter 2 April - June 2023
spacer
Quarter 1 January - March 2023
spacer
Quarter 4 October - December 2022
Tax Office sounds warning on 8 types of super schemes

The Australian Taxation Office has earmarked a number of superannuation and SMSF schemes it says are under additional scrutiny for their ability to enable taxpayers to evade laws around superannuation and tax rules.

       

 

There are a number of warning signs associated with illegal super schemes that Australians interested in SMSFs must be aware of.

Taking part in an illegal super scheme could see you penalised financially, disqualified from being a trustee and having to wind up your SMSF, or even spending time behind bars.  

The Australian Taxation Office has now highlighted eight separate types of superannuation schemes that are attracting its attention for all the wrong reasons. These are:

Related-party property development ventures

While an SMSF can invest directly or indirectly in property development ventures, the Tax Office said “extreme care must be taken”.

Some arrangements can give rise to significant income tax and superannuation regulatory risks, such as the potential application of the non-arm’s length income provisions and breaches of regulatory rules about related-party transactions.

Non-concessional cap manipulation

Non-concessional cap manipulation sees individuals and some SMSF members “deliberately exceed their non-concessional contributions cap with a view to manipulating the taxable and non-taxable components of their superannuation account balances”.

Granting legal life interest over commercial property to SMSFs

This is done by SMSF members or other related entities to divert rental income so it can be taxed at a lower rate without full ownership of the property ever transferring to the SMSF.

Dividend stripping

In this scenario, shareholders in a private company transfer ownership of their shares to a related SMSF so that the company can pay franked dividends to the SMSF with the purpose of stripping profits from the company in tax-free form.

Some limited recourse borrowing arrangements (LRBAs)

Where these arrangements aren’t consistent with a genuine arm’s length dealing.

Personal services income

Where an individual — with an SMSF often in pension phase — diverts income earned from personal services to the SMSF so it is concessionally taxed or treated as exempt from tax.

 

The next two arrangements being monitored by the ATO relate to the new super caps and restrictions that apply as a result of the super changes that came into effect on 1 July 2017:


Improper use of multiple SMSFs

The ATO said having multiple SMSFs does not ordinarily raise compliance issues, but the establishment of additional SMSFs intended to manipulate tax outcomes would.

The example provided was a switching of each respective fund between accumulation and retirement phases.

Inappropriate use of reserves

In the past, many existing reserves “arose legitimately from legacy pensions that are no longer available”, the Tax Office has conceded.

However, there are now very limited appropriate circumstances where new reserves would be established and maintained in SMSFs.

Structures using reserves designed to bypass super balance and transfer balance cap measures will attract scrutiny.

 

To prevent falling prey to foul play and super schemes that are illegal, the ATO has asked taxpayers to make sure they are receiving ethical professional advice when undertaking retirement planning.

It emphasised the importance of seeking a second opinion from a trusted and reputable expert, especially where in doubt.

 

 

Grace Ormsby 
25 November 2019 
accountantsdaily.com.au

 

Liability limited by a Scheme approved under Professional Standards Legislation.
© O'Brien and Partners 2024 - All Rights Reserved | 333 Canterbury Road, Canterbury VIC 3126 | Tel: 03 9509 3911 Site by Acctweb