Calls for calm over pending CGT amendments
SMSFs awaiting legislative amendments in relation to the CGT won’t necessarily be ruled out of the relief should the amendments fail to pass Parliament before 30 June as the legislation will likely be backdated, according to the SMSF Association.
SMSF Association head of technical Peter Hogan says the recent LCG confirmed that the transitional arrangements are intended to provide CGT relief for funds to reset the cost base where they move from current pension phase to accumulation phase.
He said members using the segregated method may continue to receive a transition to retirement, not only for 2016-17 but also past 30 June 2016 into the 2017-18 financial year.
“The ATO’s view makes it clear that the relief is intended to be applied to the situation and that consequently the government is considering legislative options to clarify this,” Mr Hogan said.
Where the technical difficulty lies, he explained, is the fact that there’s no automatic conversion of the transition to retirement either to an account-based pension or to an accumulation account with the way a transition to retirement income stream is currently defined in the legislation.
“In other words, the only way that a transition to retirement income stream can cease, is if you commute it, the way the definition currently stands,” Mr Hogan said.
“So clearly any amendment that is made will need to [allow for] an automatic conversion of the TRIS back to something which is not in retirement phase, and which is in accumulation phase.”
Mr Hogan said there is concern, however, given that these necessary amendments that will need to apply from 30 June onwards, the amendments won’t be passed as legislation before this date.
“These things do take time. We do have three or four months so I’m possibly being overly pessimistic, and with a bit of luck we may well see some draft legislation which may get through Parliament in time to meet the 30 June deadline,” he said.
“We may not see the legislation before 30 June which often happens in these sorts of circumstances.
“So that’s a watch this space to see if we do get the change of rules through Parliament before 30 June or not.”
Mr Hogan said this should not be a barrier to accessing the CGT relief even if the amendments aren’t passed before 30 June, with the legislation usually backdated in these types of situations.
“I think there is a clear intention indicated in the LCG, and with the explanatory memorandum and the original legislation, that it’s intended that CGT relief should apply in these circumstances and so any legislation, even if doesn’t get through Parliament before 30 June, will be backdated back to an appropriate date. So that the CGT relief will be available,” he said.
Mr Hogan also reassured SMSF practitioners and trustees that the Commissioner of Taxation has indicated that as long as the physical CGT elections are made in the preparation of accounts, the ATO will be satisfied.
“So it’s not something that they necessarily need to bed down in a hard and fast way before 30 June this year,” he said.
“Clearly, it would still be a good idea for trustees to minute the fact that a decision has been made to act on the CGT relief, that the trustees may wish to take appropriate action in order to claim the capital gains tax relief.”
MIRANDA BROWNLEE
Tuesday, 21 March 2017
smsfadviser.com
Latest Newsletters
Hot Issues
- Aged care report goes to the heart of Australia’s tax debate
- Removed super no longer protected from creditors: court
- ATO investigating 16.5k SMSFs over valuation compliance
- The 2025 Financial Year Tax & Super Changes You Need to Know!
- Investment and economic outlook, March 2024
- The compounding benefits from reinvesting dividends
- Three things to consider when switching your super
- Oldest Buildings in the World.
- Illegal access nets $637 million
- Trustee decisions are at their own discretion: expert
- Regular reviews and safekeeping of documents vital: expert
- Latest stats back up research into SMSF longevity and returns: educator
- Investment and economic outlook, February 2024
- Planning financially for a career break
- Could your SMSF do with more diversification?
- Countries producing the most solar power by gigawatt hours
- Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
- Quarterly reporting regime means communication now paramount: expert
- Plan now to take advantage of 5-year carry forward rule: expert
- Why investors are firmly focused on interest rates
- Super literacy low for cash-strapped
- Four timeless principles for investing success
- Investment and economic outlook, January 2024
- Wheat Production by Country
- Time to start planning for stage 3 tax cuts: technical manager
Article archive
- January - March 2024
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
January - March 2017 archive
- Calls for calm over pending CGT amendments
- Almost the world's best for retirees
- ATO reports on top contravention areas for SMSFs
- What recent retirees can teach pre-retirees
- Deloitte points to ‘red flag’ SMSF patterns
- Save early, save often
- Government pushes forward with multinational tax measures
- Jump-start your retirement savings
- Government urged to rectify ‘legislative shortcoming’ with CGT relief
- Some financial terms explained
- Areas of key focus for SMSFs in 2017.
- Powerful Superannuation modelling tools available on our site.
- Your New Year reading: beyond John Grisham
- What a long-term view of the market can teach investors
- CGT confusion seeing unnecessary sell-offs
- ‘Devastating’ property investments hitting SMSFs
- Asset valuation crackdown imminent for SMSFs
- New Year (investment) resolutions
- Trump stimulus to boost global markets
- Female advice customers on the rise
- Retirement costs outpace rise in CPI
- ATO set to scrutinise CGT relief claims