Buy-back or redemption of certain hybrid securities
On 13 February 2020, the ATO released a discussion paper regarding a potential practical compliance approach for determining the market value of certain hybrids securities when bought back or redeemed from an investor.
Feedback closed on 11 March 2020.
Foreign income tax offsets (FITO)
On 14 February 2020, the ATO welcomed the decision of the High Court not to grant an application for special leave to appeal a decision of the Full Federal Court, who had found in favour of the ATO in relation to foreign income tax offsets (FITO).
This decision reminds taxpayers that they can only claim FITO to the extent that a capital gain is assessable in Australia, rather than the full amount assessed in a foreign jurisdiction.
The ATO advises that now is the time to review any claims and make any necessary voluntary amendments, as they intend to commence compliance activity on this issue in the near future.
Superannuation rates and thresholds for 2020-21
On 12 March 2020, the ATO released the key superannuation rates and thresholds and employment termination payment thresholds for 2020-21.
The below thresholds remain unchanged for 2020‑21.
- Non-concessional contribution cap: $100,000
- General concessional contribution cap: $25,000
- General transfer balance cap: $1,600,000
- Defined benefit income cap: $1,600,000
SMSFs and property development
The ATO has released SMSF Regulator’s Bulletin SMSFRB 2020/1: Self-managed superannuation funds and property development to outline concerns about new and emerging arrangements that pose potential risks to SMSF and their members from a regulator or income tax perspective.
In particular, the ATO has seen an increase in the number of SMSFs entering into arrangements with related or unrelated parties, involving the purchase and development of real property for subsequent disposal or leasing. This raises regulator concerns for some arrangements including:
- where the arrangement amounts to the SMSF being maintained for a purpose outside those permitted by the sole purpose test
- where the SMSF does not continue to meet relevant operating standards, including record-keeping requirements, valuations and keeping SMSF assets separate from members assets
- where the arrangement includes the provision of a loan or financial assistance to a member or their relative (either directly or indirectly)
- where the SMSF acquires assets from a related party
- where the arrangement features the SMSF borrowing money
- where the SMSF contravenes the in-house asset rules
- where payments out of the SMSF are in fact payments of benefits contravening the relevant payment standards (i.e. illegal early release of superannuation)
- where investment is not made and maintained on an arm’s length basis.
The ATO will continue to monitor property development arrangements involving SMSFs, particularly those that include LRBAs and/or related party transactions.
COVID-19 stimulus measures
The ATO has released a ‘one stop shop’ for essential tax and superannuation information on the COVID-19 stimulus measures.
The ATO’s Coronavirus page provides information about what people need to know or do to get access to the tax or superannuation measures as announced by the Government as part of its economic response to COVID-19.
Early release of super – integrity and compliance
On 18 June 2020 the ATO updated their advice on the COVID-19 early release of superannuation scheme. In some cases, the ATO has stopped applications and prevent super money from being released. The ATO will use a variety of data sources to check for claims that were made incorrectly. Behaviours the ATO states will attract their intention include:
- applying where there is no change to regular salary and wages, or employment information
- artificially arranging affairs to meet the eligibility criteria
- making false statements or fraudulent attempts to meet the eligibility criteria
- withdrawing and recontributing to super for a tax advantage.
No early access to superannuation for TTRs or TAPs
On 9 April 2020 the ATO confirmed that the Coronavirus early access to superannuation measures will not entitle members to access super from non-commutable income streams such as Transition to Retirement income streams or Term Allocated Pensions. However, a TTR can be rolled back to accumulation phase to use the early access measure.
SMSF benefits not listed on myGov
The ATO has published information to explain why some SMSF members requesting early release of super may not be able to see their SMSF in the list of available funds on myGov. This can happen if:
- the SMSF is newly registered and the registration process is not yet complete;
- has overdue annual returns
- has a trustee that has been disqualified
- has a de-registered corporation trustee.
If the SMSF is not showing in the members list of available funds on myGov, they are encouraged to telephone the ATO for assistance with their early release of super application.
Re-reporting of TAP commutations
The Treasury Laws Amendment (2019 Measures No. 3) Act 2020, which received Royal Assent on 22 June 2020, provided a new way of calculating the debit which arises in an individual’s transfer balance account when a member commutes a term allocated pension (TAP) which commenced prior to 1 July 2017.
Impacted funds will now need to review information already reported to the ATO and consider whether they need to amend any reporting in line with the legislation.
The ATO has announced that it intends to provide guidance to trustees and agents in August 2020 regarding the time frame in which they expect any review of the fund’s reporting to be completed, and will not take any compliance action against funds who do not review their reporting before this time.