EXCESS

Contributions Tax

The problemisgettingbigger

The issues & Govt. revenue grows…

Type of assessment Transitional* 2007-08 2008-09 2009-10

Excess concessional contributions only

Not applicable 18,607 15,035 2,579**

Excess non-concessional contributions only

1,823 2,089 2,019 <5**

Both excess concessional and non-concessional contributions

Not applicable 441 391 <5**

Type Transitional* 2007-08 2008-09 2009-10

Excess concessional contributions only

Not applicable 85.4 72.5 6.2**

Excess non-concessional contributions only

53.4 75.0 71.8 0.1**

Both excess concessional and non-concessional contributions

Not applicable 17.5 18.8 0.1**

No. of ECT notices issued

Value of the ECT liabilities

The issues & Govt. revenue grows…Average & median values of ECT liability

Financial year Contributions type Average Median

Transitional Non-concessional 29,292 9,300

2007-08 Concessional only 4,589 1,923

Non-concessional only 35,902 11,625

Concessional and non-concessional 39,682 4,880

2008-09 Concessional only 4,822 1,993

Non-concessional only 35,562 17,623

Concessional and non-concessional 48,081 6,913

2009-10 Concessional only 2,404 1,410

Non-concessional only *** ***

Concessional and non-concessional *** ***

Transitional 2007-08 2008-09 2009-10

Applications received* 408 1,100 225 31

Number finalised 398 857 111 10

In Progress 10 243 114 21

Discretion exercised 84 146 7 Nil

No. of applications to disregard or reallocate

Is there light at

the end of the

tunnel for

Excess

Contributions

Tax (ECT)?

• ATO removal of Taxpayer Alert 2010/2• MYEFO announced changes to clarify operation of

certain trust deed clauses

SMSFR 2011/D1Key concepts: Limited Recourse Borrowing Arrangements

TR 2011/D3When a pension commences and ceases

Key concepts:

• What is a ‘single acquirable asset’?

• Distinguishing between repairs, maintaining & improvements

• What constitutes the asset becoming a different asset

(replacement)?

• What about some of the outstanding issues?

A NEW TV SHOW? Who will win… The challenge is to use a SMSF Limited Recourse Borrowing Arrangement, make improvements to the property (using SMSF cash) but only to such an extent that it doesn’t become a different asset.

2

Has draft ruling TR 2011/D3 caught us with our pants down?

• When a pension commences

• When a pension ceases:

– Failure to meet minimum standards

– Exhaustion of capital

– Commutation

– Death

It’s been a busy year…

• SMSFD 2011/1 – is a benefit payable with a cheque or promissory note 'cashed' at the time the cheque or note is received by the member or beneficiary?

• ATOID 2011/24 – waiver of disqualified persons – serious dishonest conduct

• ATOID 2011/77 – payment of death benefit to former stepchild

• ATOID 2011/81 – meaning of ‘give a charge’ as per SISR 13.14

• ATOID 2011/83 – death benefits paid to former spouse of same sex relationship

• ATOID 2011/84 – scheme to avoid prohibition on acquiring assets from related parties

It’s been a busy year…

• SISA s62A (SISR 13.18AA) – Collectables

• ITAR s295.465.01 – Streamlined TPD Insurance tax deductions

• Consultation Papers:– Concessional contribution cap extension for over 50’s

– ‘Once-off’ refund of excess contributions tax for concessional contributions

• MYEFO:– Freezing of indexation with contribution caps

– Extension to 25% reduced minimum pension

– Abolition of age limit for SGC

• Future of Financial Advice Reforms

• Stronger Super Reforms

Where to for

SMSFs in 2012?