Smsf Law
Introduction
There are many benefits to operating a Self managed superannuation fund (SMSF) including investment choice, control over where assets are invested and a number of tax advantages, making these funds an attractive wealth creation vehicle for individuals seeking to maximise their income and lifestyle in retirement.
With an ageing population placing pressure on the Australian economy it is no wonder the Government continues to acknowledge the SMSF sector as playing a critical role in encouraging individuals to take control of their retirement savings. This is evidenced by the ongoing provision of tax concessions and development of rulings and taxpayer alerts aimed at providing greater clarity and confidence to trustees.
Whilst encouraging growth in this sector the Government in its role as the Regulator, continues to review and tighten the rules and regulations that SMSF trustees must adhere to. These obligations exist to ensure that funds’ assets are protected and maintained for the sole purpose of providing retirement benefits to members.
Compliance with the Sole purpose test is arguably the single most important obligation of a SMSF trustee and failure to comply can result in serious civil and criminal penalties and loss of tax concessions.
This paper will commence by providing an explanation of the Sole purpose test in the context of how it applies to an SMSF. It will then draw the reader’s attention to recent cases where Funds have been found by the courts, to have breached the Sole purpose test. The paper will continue to explore the specific activities that caused these breaches.
Saving only for retirement – the Sole purpose test
In order for an SMSF to receive tax concessions it must be a Complying superannuation fund. For an SMSF to be a Complying super fund it must be a Resident regulated superannuation fund at all times during the income year and must have not contravened any of the Regulations or provisions
There are many benefits to operating a Self managed superannuation fund (SMSF) including investment choice, control over where assets are invested and a number of tax advantages, making these funds an attractive wealth creation vehicle for individuals seeking to maximise their income and lifestyle in retirement.
With an ageing population placing pressure on the Australian economy it is no wonder the Government continues to acknowledge the SMSF sector as playing a critical role in encouraging individuals to take control of their retirement savings. This is evidenced by the ongoing provision of tax concessions and development of rulings and taxpayer alerts aimed at providing greater clarity and confidence to trustees.
Whilst encouraging growth in this sector the Government in its role as the Regulator, continues to review and tighten the rules and regulations that SMSF trustees must adhere to. These obligations exist to ensure that funds’ assets are protected and maintained for the sole purpose of providing retirement benefits to members.
Compliance with the Sole purpose test is arguably the single most important obligation of a SMSF trustee and failure to comply can result in serious civil and criminal penalties and loss of tax concessions.
This paper will commence by providing an explanation of the Sole purpose test in the context of how it applies to an SMSF. It will then draw the reader’s attention to recent cases where Funds have been found by the courts, to have breached the Sole purpose test. The paper will continue to explore the specific activities that caused these breaches.
Saving only for retirement – the Sole purpose test
In order for an SMSF to receive tax concessions it must be a Complying superannuation fund. For an SMSF to be a Complying super fund it must be a Resident regulated superannuation fund at all times during the income year and must have not contravened any of the Regulations or provisions