logo
spacer
spacer

 eWombat Search 
>
spacer spacer spacer
Latest Accounting News
Hot Issues
ATO dispels top tax time myths to clients as clampdown rolls out
Tools for budgeting, cash flow, Super and more ….
Guidance for SMSFs on transfer balance reporting
ATO issues alert on super, tax scams
Salary sacrifice integrity
Understanding the evolution of blockchain and cryptocurrencies
Update to Australia's vital statistics
Tax Time Checklists- Individual, Company, Trust, Partnership and Super Funds
SMSFs - Our 'hardest' jobs
Tax Office reveals adventurous, dubious claims ahead of tax time
ATO reveals top tax time mistakes, set to contact 1 million taxpayers
Watch out for charges with incoming GST laws.
Super savings gap for women stuck at 30%
‘Wipe the slate clean’: Clients, accountants urged to use new amnesty period
Statistics for all Australians
Touch Payroll (STP)
‘Calm before the storm’: Government proposes 12-month SG amnesty
Government intensifies cash payments crackdown - Kelly O'Dwyer
Passive investment companies tax rate still 30%
Cryptocurrency audits tipped to increase this EOFY
Australia by numbers – Update
$2.4m lost to tax scams, ACCC reports
No GST on digital currency
Federal Budget 2018 - Overview
Your Budget
4 components of our 2018 Federal Budget
Resources to help understand and implement Single Touch Payroll (STP)
New rules capture SMSFs trading big with cryptocurrency
New passive income test for lower corporate tax rate
Tools to help you manage your financial position are available on our site.
Articles archive
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 4 of 2015
Articles
FBT – Christmas Parties and Taxi Fares
Merry Christmas for 2015 and Happy New Year.
Common errors in claiming deductions for super contributions
Employee Christmas Parties and Gifts – Any FBT?
Collectables Require Action Now
Why the ATO’s new powers make SMSF compliance more important than ever
Self Managed Superannuation Funds – Is it for Retirement?
ATO warns against misusing partnerships
The Scammers Shame
ATO offers SMSF 'unwinding' for aggressive tax arrangements
Salary and Wages PAYG Shortfall
SuperStream
Australian Taxation Office (ATO) Telephone Scammers – BEWARE!
Navigating the BDBN minefield
SMSFs warned on emerging LRBA issue
Short Access to Term Deposits
Retirees taking super in lump sum is a ‘myth'
Self Managed Superannuation Funds – Is it for Retirement?


             


A fundamental requirement is that superannuation funds meet a sole purpose test – the provision of retirement benefits.  If it appears that there is a different purpose, the fund can become non-complying.


The auditor, the tax office and the court, will look at all the circumstances to form an opinion.  If that happens, the trustee will have difficulty proving them wrong.  (That is called burden of proof).


Is it likely that a purchase of a residential property and leasing it to a child, who doesn’t pay rent or pays less than market rent, would be to the benefit of the members?


Do you think the purchase of a caravan or a motor vehicle or some hobby farm expenses, is for the benefit of members at their retirement?


It is highly likely that the answer to those questions is no and therefore the fund is not being provided for the sole purpose of providing retirement benefits.


That means that the fund becomes non-complying.  It could also mean that the trustees are liable to pay penalties personally and quite substantial ones.


It is not easy always to determine whether something is for the sole purpose of retirement benefits, but one example recently was decided on the basis that the provision of rental income was on non arms length terms to the member's son.


 


Source:  Written for AcctWeb by a Melbourne accounting firm


 




7th-December-2015