DIY super tax crackdown looms
Friday, September 7, 2007/
DIY super guidelines released by the tax office yesterday could be designed to strengthen its hand in future legal action against rogue fund operators, a leading super expert says.
The Australian Taxation Office yesterday released two draft rulings governing the management of self managed super funds, one dealing with the central “sole purpose” test that requires super funds to be used only for the purpose of providing retirement income.
Pitcher Partners head of superannuation services Victoria Macdermid says by increasing the amount of information available on the management of self managed super funds, the tax office will improve its ability to successfully prosecute those that breach the rules.
“Reading between the lines, they’re almost taking a framework where it will be easier for them to take action when trustees get it wrong. Without it, it would be harder for the ATO to knock people on the head because they could say we didn’t know we had done something wrong, so in effect these rulings are a springboard for legal action,” Macdermid says.
Earlier this year the tax office announced that it was adding extra resources to its compliance unit in an effort to better target rogue DIY super fund trustees. The number of DIY super funds has rapidly increased in recent years.
The rulings, which are likely to be the first of many, follow recent changes to super law to make it clear that the tax office has the power to issue public rulings on superannuation, as it has done for many years in relation to tax.
Macdermid says the rulings are more educational than instructive and will probably not add hugely to the knowledge of professional superannuation advisers, who control a large proportion of DIY super funds.
For anyone tempted to bend the rules governing DIY super, however, the message is clear.
“We are likely to see a flow of rulings that are really establishing the line in the sand, and anyone who falls the wrong side won’t have excuses or be able to say they didn’t know, because this information will be publicly available; that’s the real message,” Macdermid says.