A recent change to SIS regulations has given the ATO enforcement powers over administering proper treatment of assets in regulating SMSFs
There are many issues the Australian Taxation Office (ATO) grapples with when regulating self-managed superannuation funds (SMSFs) and one is the proper treatment of assets.
To be a little more specific, it’s really all about keeping personal assets complete separate from the assets of the fund. Sounds simple in theory, but in practice it has not proven to be the case and while it has always been a requirement for SMSF trustees the ATO has never had the power to enforce this rule. That is until now.
A recent change to the Superannuation Industry Supervision (SIS) Regulations has now provided the ATO the ability to administer this requirement. SIS Regulation 4.09A was recently inserted and has actually been operative since 7 August 2012 to take care of this anomaly.
The new regulation stipulates a trustee of an SMSF (or any other regulated superannuation fund for that matter) must keep the money and other assets of the fund separate from and money and assets that are held by the trustee personally or that are money or assets of a standard employer or an associate of a standard employer of the fund.
While this has been recognised as a sensible change by sector commentators, as this was one of the most problematic issues the regulator has been dealing with, there is one element that seems to be missing.
The new regulation addresses the problem in regard to individual trustees but has not made any allowances for corporate trustees of SMSFs. This perceived oversight aside the ATO has adopted a very proactive stance in assisting trustees to comply with the new regulation. To this end it will be issuing guidelines that will help trustee comply with the formal requirement.
Some of the items to be contained in this release will be emphasising the importance of making sure the assets are registered in the name of the trustee, the use of declarations in the trust, as well as situations where it is not possible to register assets in the name of the trustees.
The last point will deal with limited recourse borrowing arrangements which themselves are up for review by the ATO in the coming months.
Darin Tyson-Chan was recently awarded the 2012 SPAA Trade Media Journalist of the Year. He is the editor of self managed super, a new publication dedicated to the SMSF practitioner. If you would like a free year’s subscription to the magazine and its associated e-newsletter valued at $100 send your details to info@bmarkmedia.com.au
