The Australian Taxation Office (ATO) is closely monitoring trustee education seminars, particularly those being held overseas, to make sure the associated strategies and investments fall into line with the sole purpose test.
“We don’t have a prudential role and if it’s a good investment and you make a lot of money, that’s okay, but we do have to make sure the investment is within the rules,” ATO SMSF regulatory and income tax products director Nathan Burgess said.
“What we’ve found with attendees of these events is that they have problems in other areas, so it’s a really good indicator to us.”
Burgess said attending an overseas SMSF trustee conference was not an issue in isolation, but could have other associated consequences that might be unintended.
“We wouldn’t be making a fund non-complying just for that, however, we probably wouldn’t be allowing a deduction [for the expenses incurred from attending the seminar] either and if we saw a pattern of behaviour, we might lose confidence in their ability as a trustee.”
He said the promotion of those types of seminars was on the rise and that had made the regulator aware some action might be needed to address the trend.
“It’s not our top priority, but … we are starting to see a lot of ads about these things and usually emphasising the holiday component, [and] I think we kind of need to stop that because it threatens the whole industry,” he said.
Ensuring the SMSF sector was seen to be running in a proper manner was a role the ATO had that most people did not understand.
To that end, he said the regulator was very careful in the way it referred to the SMSF sector.
“One of the things we don’t call SMSFs is ‘do it yourself’. You won’t hear that from me unless I’m talking against that concept,” he said.
“I refer to these funds as self-managed and self-managed means you make your own decisions where you’re good enough, but you actually engage the proper experts in the areas you’re not sure about.”''