The ATO has just finalised a critical ruling for superannuation funds.
Should you contravene what is said in this ruling, you may find yourself subjected to a tax rate increase from 0% or 15% (depending on your SMSF) up to 45% on some or even all of the income derived from your self managed superannuation fund. This can occur relatively quickly and accidentally, so it is essential to understand the situation and be proactive about avoiding it.
The team at YBM are concerned with your financial welfare and would like to make it a priority to ensure that you are making the most out of your SMSF. We urge you to speak with us about your superannuation goals and current plans to ensure that the best possible outcome is achieved for your financial future.
Let’s explain the issue here.
If your superannuation fund acquires anything less than the market value rate, then you are potentially leaving your fund to be subjected to a 45% tax rate. This generally occurs during non-arm’s length transactions, such as a cousin offering you a discount on their maintenance services for a rental property owned by your superannuation fund or another family member offering their educated support with your share portfolio.
These non-arm’s length transactions can occur naturally through conversation with friends and family as you are put in touch with people looking to do right by you. However, with these new SMSF rulings from the ATO, such innocent situations are ones that you may pay for dearly.
To avoid inadvertently paying extra tax on your self managed superannuation fund, acquiring any real estate, services or goods must be on an arm’s length basis, and this includes, in certain circumstances, services that are provided by yourself as trustee of your own fund.
If you are unsure what action should be taken regarding goods and services acquired for your self managed superannuation fund. We urge you to contact one of our experienced professionals at YBM to look into the matter for you.
We have knowledgeable and professional staff who can advise you on the best course of action for your situation. The downside could otherwise be very costly indeed to your financial future.