Back to Main Pre 1999 Self-managed Super Fund And Related Unit Trusts Arrangement Under Review

• Published: 2009-04-21 01:59:23

  The Tax Office is warning people to be cautious of arrangements being promoted that involve the sale of an inactive pre 1999 self-managed super fund (SMSF) with a related unit trust.

  Under the arrangement, the promoter advertises the sale of a pre 1999 SMSF that has control of a related unit trust.

  The promoter claims that any investments made by the SMSF into the related trust prior to the end of the transitional period on 30 June 2009 will not need to be included as in-house assets.

  However, these arrangements may not satisfy the transitional rules as the SMSF may not be continuously maintained to provide retirement benefits to members both before and after the sale of the pre-1999 SMSF.

  Tax Commissioner Michael D’Ascenzo said taxpayers should be aware that the transitional provisions only apply in specific circumstances.

  “We are aware these arrangements are being promoted and are concerned that taxpayers may be tempted into such arrangements without realising that the transitional provisions may not apply to their circumstances.

  “This is also a timely reminder for those trustees whose funds are subject to the transitional rules to review the fund’s investments and ensure that their SMSFs will remain compliant after the transitional period ends on 30 June.”

  Tax agents wanting to provide information about people or companies who may be promoting arrangements covered by this alert should call the tax practitioner integrity service on 1800 639 745.

  Background

  In-house assets are limited to 5% of the market value of the fund’s assets. The law was amended in 1999 to extend the definition of in-house assets to include an investment in a related trust.

  Transitional arrangements were put in place to ensure prior investments were not immediately affected. The transitional period ends on 30 June 2009.

  More information

  Taxpayer alert 2009/8 is available from the Tax Office website www.ato.gov.au/atp

  More information on in-house assets and transitional rules for SMSFs is available on the Tax Office website or by phoning 13 10 20.

  Taxpayer alerts are intended as an ‘early warning’ to taxpayers, superannuation fund trustees and their advisers of significant tax planning arrangements and/or superannuation regulatory issues that the Tax Office has under risk assessment.

  

  Supplied by Australian Taxation Office