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The ATO is reviewing arrangements where individuals (at ornapproaching retirement age) purport to divert personal services income (PSI) tona self managed superannuation fund (SMSF) to minimise or avoid their income taxnobligations.
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The ATO notes the arrangement it has described in TaxpayernAlert TA 2016/6 and is encouraging taxpayers who have entered into suchnand arrangement to contact the ATO so it can help resolve any issues in antimely manner.
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Where individuals and trustees come forward to work with thenATO to resolve issues, it anticipates that in most cases the PSI distributed tonthe SMSF by the non-individual entity would be taxed to the individual at theirnmarginal tax rate. Issues affecting SMSFs will be addressed on a case-by-casenbasis, but the ATO will take individuals’ cooperation with it into account whenndetermining the final outcome.
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TIP:nThe ATO has said that individuals and trustees who are not currently subject tonATO compliance action and who come forward before 31 January 2017 will havenadministrative penalties remitted in full. However, shortfall interest charges willnstill apply. Please contact our office for further information.
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Important: Clients should not act solely on the basis of the material contained in Update. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This update is issued as a helpful guide to clients and for their private information.