Media release 2009/33
The Tax Office today issued a taxpayer alert warning trustees of self-managed super funds (SMSF) to be cautious of arrangements involving the non-commercial use of negotiable instruments, such as promissory notes, in an attempt to gain income tax and super benefits.
The arrangements involve a trustee or member issuing a promissory note, cheque or other negotiable instrument which is passed between trustees and members with no exchange of money or assets ever taking place, or the exchange may be delayed intentionally.
Tax Commissioner Michael D’Ascenzo said the Tax Office is concerned trustees may be lured into these arrangements without understanding the potential super and income tax implications.
“We are concerned with the non-commercial use of promissory notes to avoid the need to liquidate assets in order to change the timing of transactions, or to obtain tax advantages that are not available in the circumstances,” Mr D’Ascenzo said.
“In particular we are concerned taxpayers may be lead into these non-commercial transactions hoping to take advantage of the existing super concessional contributions caps in view of the government’s Budget announcement to halve the existing concessional contributions caps from 1 July 2009.”
The alert doesn’t apply to the use of negotiable instruments involving real movements of funds or assets through genuine withdrawal and re-contribution strategies. However, it does cover artificial and contrived arrangements including ‘round robin’ transactions.
People wanting information about this taxpayer alert can call the Tax Office on 13 10 20.
Tax agents with information about anyone who may be promoting arrangements covered by this alert should call the tax practitioner integrity service on 1800 639 745.
More information
Taxpayer alert 2009/10 is available from the Tax Office website www.ato.gov.au/atp.
More information on the Government’s Budget announcement on changes to the super concessional contribution caps is available in the media release Improving Equity in Retirement issued by the Minister for Superannuation and Corporate Law.
TAXPAYER ALERT
Taxpayer alerts are intended as an ‘early warning’ to taxpayers and their advisers of significant tax planning issues or arrangements that the Tax Office has under risk assessment or about which it has concerns.
Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
Christie has written 811 awesome articles for us at Alan Lewis Accountants – BLOG
Twitter: @christielewis | Facebook
