In house asset exemptions in Aust SMSFs

The Australian Taxation Office (ATO) is re-examining the rules around in-house asset exemptions contained in the Superannuation Industry (Supervision) Act. The area of concern for the regulator involves the treatment of investments in a related trust held by an SMSF as a required part of a limited recourse borrowing arrangement (LRBA). Specifically, the ATO is looking at amending the legislation whereby an SMSF investment in a related trust due to an LRBA can be categorised as an in-house asset at a particular point in time of the transaction. These points in time are at the commencement of an LRBA where the borrowing has not yet begun or the related trust does not yet hold the acquirable asset, and where the asset purchased through an LRBA continues to be held in the trust after the loan has been repaid. The ATO is proposing an amendment to the legislation to make these instances exempt from being treated as in-house asset so trustees have greater certainty in regard to the start and finish of LRBAs. Feedback about this proposed change has been sought from industry participants, with the regulator accepting final submissions at the end of January.

In other regulatory news, the Australian Securities and Investments Commission (ASIC) has issued an alert reminding registered SMSF auditors of their obligation to furnish an annual statement within 30 days of their registration anniversary. The statement is to verify the auditor is continuing to meet the conditions of registration. SMSF registered auditors who may have difficulty meeting this deadline can apply for an extension, but ASIC has stipulated it will review these applications, taking into account whether the extension request was made before the anniversary date and the delay in completing and submitting the statement was a result of circumstances outside the auditor’s control, such as serious illness or injury.

Source Article by Darin Tyson-Chan – See more at: http://www.smsmagazine.com.au/articles/ato-fine-tuning-in-house-asset-rule#sthash.3fy7DF8N.dpuf

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