Date posted: 15/11/2019 2 min read

ATO Law Compliance Guide 2019/D3 & Practical Compliance Guide 2019/D6

CA ANZ submission to Treasury discussion paper.

The Tax Office issued two draft documents impacting the taxation of superannuation funds and sought public comment following on from recent legislative amendments concerning non-arm’s length income and expenses.

CA ANZ responded to this request. Our concerns with the draft LCR and PCG include:

  • The administration of the law as outlined in the draft LCR would result in adverse tax outcomes that, in many cases, are grossly disproportionate to the perceived mischief.
  • For example, if a SMSF Trustee (who is also an accountant in public practice):
  • prepares the SMSF’s book keeping, accounts and annual returns free of charge (saving the fund a small amount of regulatory and administration costs); but
  • merely uses the firm’s computer to undertake such work; or
  • even lodges the SMSF’s annual return via the firm’s tax agent lodgment program, then the draft LCR is strongly suggesting a potential tax outcome whereby all the SMSF’s income is now NALI. In our view, such an alleged outcome would suggest there is an urgent need for a legislative correction.
  • Moreover, the ATO’s draft PCG is only offers limited transitional solution up to 30 June 2020.

CA ANZ Recommendations

After considering the feedback received on the draft LCR and PCG, the ATO should prepare revised drafts of these guidance products (or, in the interests of time, produce a document listing proposed changes, if any).

The ATO should then convene a face to face consultation process to explain the proposed positions to be adopted in the final guidance.