CA ANZ and CPA Australia thank the ATO for the opportunity to provide comments on draft Law Administration Practice Statement (“PS LA 2021/D3”) and draft Tax Determination (“TD 2021/D6”).

The joint accounting bodies did not agree with the proposed treatment of rectified transactions.

This issue is dealt with under a sub-heading in PS LA 2021/D3 which states that an “attempt to rectify a transaction by paying an amount equal to the superannuation benefit to the superannuation fund, immediately or shortly after receiving the benefit, is generally a factor that would be given little or no weight when considering to exercise the discretion” (our emphasis).

Our view is that an attempt to immediately rectify an inadvertent error is valuable evidence that discretion may be deserved.

Our view is that an attempt to immediately rectify an inadvertent error is valuable evidence that discretion may be deserved.

In addition, genuine misunderstandings about the complex superannuation laws and related administrative guidance may see a benefit paid out before a relevant condition of release specified in the Superannuation Industry (Supervision) Regulations 1993 has been satisfied.

In an SMSF context for example, such mistakes may arise because the SMSF trustees have misunderstood information published on the ATO website, and the error is uncovered by a professional adviser only during the preparation of the annual accounts, when the audit is conducted and/or during the tax return preparation process.

CA ANZ and CPA Australia encouraged the ATO to offer reasonable concessions in these and other similar situations.

We suggested that PS LA 2021/D3 should highlight the practical importance of SMSF trustees obtaining ATO or professional advice.