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No plans to extend NALI compliance relief, says ATO

The ATO says it does not intend to extend PCG 2020/5 for another year and will wait to see what changes the government legislates.

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Late last month, Treasury released some proposals for amending the non-arm’s length income provisions in relation to expenses of a general nature.

Treasury has proposed that SMSFs would be subject to a factor-based approach wherein the maximum amount of income taxable at the highest marginal rate would be set at five times the level of the general expenditure breach.

Following the release of proposed amendments, calls from industry have emerged for the ATO to extend the transitional relief provided through PCG 2020/5 for general expenses for a further year.

With the amendments unlikely to be legislated ahead of 30 June 2023, the Tax Institute and DBA Lawyer’s director Daniel Butler said an extension to PCG 2020/5 would be appropriate to ensure funds have time to prepare.

Speaking at the SMSF Association National Conference, ATO deputy commissioner, superannuation and employer obligations Emma Rosenzweig was asked whether the ATO would consider extending the transitional relief past 30 June if there isn’t a legislative fix implemented by then.

Ms Rosenzweig said the ATO does not intend to extend PCG 2020/5 beyond 30 June this year for SMSFs.

“It’s been in place for a number of years already and the PCG has never been about an interpretation of the law, we’ve always had a clear position on how the law operates.”

“I understand there have been concerns raised and that's what's being consulted on, about whether that's the right policy, but it is what the law currently says.”

Ms Rosenzweig said trustees have had a number of years to understand what the rules are and how they should be applied.

“So, we’re not intending to extend it.”

Industry has already raised a number of concerns about the proposed amendments to the non-arm’s length income provisions, with some professionals fearing it will do nothing to alleviate red tape.

Industry associations have highlighted that the proposed measures would effectively create a tax rate of 225 per cent to any discount on a non-arm’s length expense, even where it’s a relatively minor breach.

The SMSF Association also expressed concerns about the application of a different tax treatment for SMSFs versus APRA-regulated super funds.

“It is also our position that tax neutrality across the superannuation industry should be maintained,” said SMSF Association deputy chief executive Peter Burgess previously.

 

 

 

Miranda Brownlee
24 February 2023
smsfadviser.com

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David Forrest

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BEc (Acc), MBA, CPA, FFin

David has been in the Financial Services Industry for nearly 30 years. He was one of the founding Directors of the successful Financial Planning and Stockbroking Practice, Henderson Gregory Forrest, for a decade. Prior to that, he held senior roles in companies such as ING, KPMG Accountants and AMP. David was previously Chairman of OAMPS Superannuation Trustee Board and currently serves as an independent Board Director for several companies.

David’s extensive experience in all forms of superannuation, including Self Managed Super Funds (SMSF), Defined Benefit Funds, retirement funding through Account Based Pensions, stockbroking with a focus on Direct Share Investment, Taxation/Remuneration Planning, Centrelink, Aged Care and business management, equip him to advise expertly on all aspects of Financial Advice.

Those with a particular interest in superannuation/SMSFs, direct share investment, salary packaging or applying for the Centrelink Pension will find his knowledge and ability in formulating and implementing creative, logical and simple wealth creation strategies a valuable asset.

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David Forrest is an Authorised Representative of Integrity Financial (SA) Pty Ltd ABN 16 133 921 187 — AFSL No 334846

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Michelle Forrest

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B Bus (Acc), CPA

Michelle’s career has spanned across the Financial Services, Retirement Living and Aged Care industries working in the private sector, not for profit and more recently with the state government for over 20 years. Her experience extends to many facets of the financial services industry, having worked in superannuation administration, technical support and financial planning practice administration.

Commencing with AMP and subsequently working in commerce and accounting roles with companies such as Brambles, Adelaide Bank Retirement Services, ECH Inc and SA Health and Wellbeing, Michelle returns to financial services after working in practice financial management at Henderson Gregory Forrest. This wide range of experience from senior accounting and management roles has provided Michelle with a strong background in business administration.

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Jasmine has worked in the financial services industry for over 12 years in all areas of client administration, working with David since 2013.

Jasmine has extensive knowledge and experience in client service including implementation of advice, portfolio reporting, assisting with the establishment of Self Managed Super Funds (SMSFs), term deposit management and a long history of helping clients with their enquiries.

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Merrilyn has worked in the financial services industry for over 11 years in all areas of client administration, and is a new addition to our client services team, returning from Melbourne to join the team in June 2019.

Merrilyn has extensive knowledge and experience in client service including implementation of advice, managed fund administration, assisting with the establishment of Self Managed Super Funds (SMSFs) and process improvement for the previous practices she has worked with. Merrilyn’s experience with direct shares constitutes the other part of our administrative support for direct equity investments.

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