The Tax Office has released its SMSF News – edition 29 (dated 26 February 2014) with details on recent SMSF issues, including:

  • Contribution reserves: reporting contributions – the Tax Office says that contributions paid into a “contributions reserve” or “suspense account” should be reported to the ATO (via the SMSF annual return) for the financial year in which they were “made” to the fund (not in the year they were later “allocated” from the reserve to the member). Where Determination TD 2013/22 applies (ie a contribution is not counted towards a member’s concessional contributions cap until the next financial year when it is allocated to the member), the Commissioner says that affected taxpayers will need to object to any incorrect assessment generated by the Commissioner based on contribution information reported to it.
  • Contributions work test – taxpayers over age 65 (but under age 75), must satisfy the “work test” in the year a contribution is “received”, not the year “allocated” to member’s account from a reserve.
  • Minimum pension payments – if a SMSF fails to meet the annual pension rules in an income year, the Commissioner says he will NOT exercise his powers of general administration (GPA) to allow a pension to continue for ECPI purposes in circumstances such as where a bank error occurred due to a mistake on the part of the trustee (and not the bank), a medical condition was not serious (or was short-term) or was experienced by only one/some (but not all) trustees.
  • Approved SMSF auditors – Auditor Contravention Reports (ACRs) must be lodged using an approved method, ie via eSAT; the business portal; or an ATO-approved paper form (which does not include a plain paper format).
  • SMSFs must have assets before ABN – the Tax Office says new SMSFs cannot register for an ABN unless they have asset aside for members (eg property, money), trustees, signed trustee’s declarations, a trust deed and identifiable beneficiaries.
  • SMSF videos – the ATO has made 2 animated videos on the application of the sole purpose test to property investments, and SMSF annual obligations.

[LTN 40, 28/2/14