SMSF retirees face ATO scrutiny
Members of self-managed super funds (SMSF) are being warned against claiming franking credit benefits by channelling dividends from shares in private companies through SMSFs.
“We are closely scrutinising SMSF members suspected of avoiding their tax responsibilities by channelling company profits through their SMSF,” Deputy Commissioner Tim Dyce said.
The practice occurs when a member of an SMSF with interests in a private company transfers their interest to a SMSF and then distributes retained profits and franking credits through the SMSF.
The SMSF then claims the franking credit tax offset which results in the tax paid by the company being refunded directly to the SMSF which can then be distributed to the member tax free.
SMSF members approaching retirement age are more likely to get involved in these schemes because profits from shares are tax exempt as they are treated as supporting the payment of pensions.
“The ATO may undertake compliance activity seeking to apply the taxation and superannuation provisions, including anti-avoidance rules to such arrangements,” Mr Dyce said.
“We encourage SMSF members who think they may be involved in such arrangements to contact us and make a voluntary disclosure or seek a private ruling from us.”
“In our actions, we will engage with affected SMSF trustees and members to develop pragmatic options to address the tax and superannuation consequences of the arrangement.”
The ATO will also consult on the application of relevant anti-avoidance provisions and consider a public ruling on such arrangements.
Any taxpayers involved in similar arrangements should review their taxation affairs and consider seeking independent advice from an advisor not involved with the arrangement.
source:- https://www.ato.gov.au/Media-centre/Media-releases/SMSF-retirees-face-ATO-scrutiny/
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