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Poor CGT advice being provided

A technical expert has expressed his concerns about the poor quality of advice some SMSF trustees have admitted to receiving with regard to the super reforms capital gains tax (CGT) relief provision.

The new rules dictated that SMSF trustees needed to make an election as to whether they were going to take advantage of the CGT relief provisions in their fund’s 2016/17 annual return.

Speaking at the Australian Shareholders’ Association 2018 Conference in Sydney, SMSF Association head of technical Peter Hogan revealed he had recently asked several trustees with fund balances of over $1.6 million if they had made the election to accept CGT relief in their 2016/17 annual return, only to receive some worrying responses.

“They said ‘yes, we’ve lodged our return, but my accountant said I don’t have to worry and I don’t have to do anything because I’ve got more than $1.6 [million in the fund] so it will just come out in the wash’,” Hogan said.

“That is absolutely the wrong answer – totally the wrong answer.

“So I told these people you need to go back to your accountant, you need to amend your superannuation return and you need to claim capital gains tax relief. You’re eligible for it and you need to claim it.

“If you don’t claim it in the 2016/17 annual return, you’ll miss out on that one-off capital gains tax relief for those people who had more than $1.6 million in a pension account as at 30 June 2017 and [needed] to move the excess into the accumulation account.”

He urged SMSF trustees to find out if their accountant had claimed the CGT relief they are entitled to and had a blunt suggestion for those who received an unsatisfactory answer.

“If they tell you you don’t need to worry about it, I’d find another accountant. Find someone who actually knows what they are talking about,” he said.

“If you have more than $1.6 [million in a pension account at 30 June 2017], you should be claiming something. You should be resetting the cost base of some assets.”

He pointed out it was not too late to rectify the situation, even if trustees had already lodged the fund’s 2016/17 annual return without claiming CGT relief, because an amended return can still be lodged before 30 June this year.

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