The director of a Perth-based accounting and advice firm has drawn attention to an anomaly in the Division 296 legislation with regard to the requirement for SMSFs to obtain an actuarial certificate if the fund has more than one member and one of them is considered in scope for the new tax.
“The explanatory memorandum refers to an actuarial certificate not being required if the member of the fund is not in scope. Now the challenge with that, and it will likely fall out with how this is implemented, is the fund might not necessarily know whether the person is in scope or not,” Cooper Partners head of SMSF and succession Jemma Sanderson told attendees of The Tax Institute Super Intensive online event held recently.
“[This is especially the case] if you’ve got the situation where the tax agent of the fund may not be privy to all of the wider superannuation benefits of the members of that fund.
“If [the tax agent is] looking after the family group, then they would likely have access to the tax portal and can jump in and see the total super balance of each of those members, but [for them] to be able to say [‘the member] is not in scope so we don’t need [to get an actuarial certificate’], they can’t make that call.”
According to Sanderson, this uncertainty may be rectified by the final procedures put in place to calculate and administer an individual’s Division 296 tax liability.
“[It could eventuate that] the SMSF does its annual return, all the other super funds in the country do their returns, the tax office does its data matching and says: ‘Jemma, you’re over the large super balance threshold so therefore you’re in scope,’ and then it might write to the relevant funds [requesting] more information about [the member] and the attributed earnings for the year,” she said.
Alternatively, she recognised the ATO might contact the tax agent directly when it confirms an individual is in scope for the Division 296 tax.
“[But] we don’t know what that process looks like [and] that’s a lot of double handling in my opinion,” she indicated.
“My preference would be [to include] some extra disclosures potentially on the SMSF annual return, but that in itself has its own challenges.
“So we will have to wait to see how that is ultimately implemented by the regulator with consultation from the industry.”