Tag: SMSF

The Government has dropped its proposed new rules for acquisitions and disposals of certain assets between self-managed superannuation funds (SMSFs) and related parties from 1 July 2013. The Tax and Superannuation Laws Amendment (2013 Measures No 1) Bill 2013 passed the House of Reps on 29 May 2013 with Government amendments that deleted the SMSF related party acquisition measures. The Bill (which still contains the tax loss carry-back measures, as amended) now moves to the Senate.

No indication was given by the Government as to why the SMSF amendments were deleted, although the Coalition had indicated it would oppose the amendments and suggested there were concerns from stakeholders about practical difficulties with the proposed valuation requirements. Concerns had also been raised about extra costs that would be imposed on SMSFs because of the amendments, eg in having to go on-market to acquire publicly available investments and costs with the need to obtain valuations.

The Bill as originally introduced had proposed to amend the SIS Act to prohibit a trustee of an SMSF from acquiring a “listed security” from a related party (except in a way to be prescribed by the regulations): proposed s 66A. Similar to the existing exceptions in s 66 of the SIS Act, the Bill provided that it would still be possible to acquire (or dispose of) business real property and certain in-house assets (not exceeding 5%) from a related party, provided the asset was acquired at market value as determined by a qualified independent valuer. Note that the Bill did not propose to include in s 66A the “intentional” requirement from “must not intentionally acquire an asset from a related party of the fund” in existing s 66. As such, the Bill could have resulted in a trustee of an SMSF being liable for unintended breaches where the acquisition (or disposal) is from a subsidiary company or trust in a diverse group of companies.

On 21 December 2012, the Government released for public consultation draft legislation relating to acquisitions and disposals of certain assets between self-managed superannuation funds (SMSFs) and related parties.

The amendments are designed to implement the Government’s Stronger Super reforms relating to acquisitions and disposals of certain assets by SMSFs and related parties. The superannuation law is proposed to be amended so that acquisitions and disposals of assets between related parties and SMSFs must be conducted through an underlying market where one exists, or where one does not exist, must be supported by a valuation from a suitably qualified independent valuer.

COMMENTS are due by 16 January 2013.

Measures introduced on 7 August 2012 are part of the suite of measures announced within Stronger Super. These measures are intended to address potential risks and strengthen the regulatory framework in which self-managed super funds (SMSFs) operate.

These measures mean that  trustees of all SMSFs, are:

• required to conduct a review of the fund’s investment strategy on a regular basis
• required to consider insurance for fund members as part of the fund’s investment strategy
• required to value the fund’s assets at market value for the purposes of preparing financial accounts and statements.

The obligation that  trustees of SMSFs are required to keep money and other assets of the fund separate from any money or assets held by the trustee  personally or by a standard employer-sponsor or an associated standard employer-sponsor is now a prescribed operating standard.

 

Trustees have always had an obligation to keep the money and other assets of the SMSF separate  However, because this was previously a covenant deemed to be part of the governing rules of the fund and not an operating standard, the law did not give the ATO an enforcement role.

The new regulation has made this requirement an operating standard, which gives the ATOthe power to enforce compliance. A person who intentionally or recklessly contravenes this standard is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units (one penalty unit currently equals $110).