Pull Over Driver, It's The Tax Office Super Rbt
Sun Herald
Sunday December 14, 2003
IMAGINE getting pulled over for a random breath test only to find that the person holding the breathalyser is from the Tax Office.
For investors that is, perhaps, the stuff of nightmares, but people running their own super fund should be alert to a shift towards an RBT approach by the Tax Office.
There are about 280,000 self-managed super funds and about 2000 new funds are being set up each month.
The Tax Office has conducted a sizeable education campaign but even the most basic of messages such as the need to file tax returns or even have a separate bank account for the fund aren't getting through. So the Tax Office is ready to roll out the booze buses or, to use taxman speak, ``rebalance our regulatory approach to compliance".
Tax Office deputy commissioner, superannuation, Mark Jackson said the most fundamental rule relating to DIY funds is the sole purpose test: the sole purpose of the fund is to provide retirement benefits to the fund members.
The idea of controlling your super fund is a powerful incentive for small business owners it seems. But the Tax Office is finding a lack of separation of assets between the fund and its members, as well as non-commercial dealings.
``Residential property and in particular holiday homes were assets often being leased to related parties; the exceedingly generous terms sometimes attaching to these leasing arrangements suggested the `arm's length' rules were being ignored," Jackson said.
``Trustees are required to have an investment strategy, which they should follow. Some funds we examined either didn't have one, or if they did, they weren't using it."
One of the concessions that DIY funds enjoy is the ability to invest 100 per cent of the fund's assets in ``business real property".
Jackson said that while the law allowed all the fund to be put into real business property, ``a question remains whether that is a prudent investment strategy and it's an issue trustees might well consider".
He also pointed out that residential property would rarely be considered ``business real property" another issue for trustees.
When it comes to self-managed super funds, accountants are vital to setting them up and running them. The Tax Office is also having a close look at the auditors' role.
By focusing on accountants and auditors, the Tax Office has done something RBT never did made passengers and publicans nervous.
© 2003 Sun Herald