Clarity needed on tax rulings

This ruling deals with contributions made to a superannuation fund, an approved deposit fund or a retirement savings account and explains the Commissioner's views as to the ordinary meaning of the word ‘contribution’ in so far as it is used concerning a superannuation fund, approved deposit fund or retirement savings account in the Income Tax Assessment Act 1997 (ITAA 1997).

“This is a significant ruling because ultimately there were reference changes that were made in 2017 regarding personal deductible contributions and then more significantly, the NALI changes that came in around in-specie transfers and how they won't necessarily reduce or remove the NALI obstacle,” Miller said.

“This is a ruling which does not have a timeline provided on it, and it's still in draft format. The live version of the ruling still references that public comments on the draft closed in August 2021, highlighting the length of time the industry has been waiting.”

He said TD 2023/D1 is also still waiting on finalisation dealing with the statutory requirements around capital gains tax and non-arm’s-length income.

“The link between our non-arm’s length gains and capital gains are effectively merged in the way the legislation currently treats them and hopefully the NALI legislation is a trigger for at least two of three outstanding ATO rulings to be finalised and give us a bit more certainty back in the industry,” he said.

The third ruling is TR 2013/5, which aligns when a pension commences and ceases with post-1 July pension changes, this is expected to be finalised at the end of June.

Additionally, the Commissioner’s ruling associated with the payment of benefits is still undergoing investigation, Miller said, dealing with illegal early release and the tax outcomes and requirements of accessing superannuation.

“Realistically for most people, we have a reasonable appreciation that if someone accesses their money early and illegally it will be taxed as assessed for income and not entitled to any benefits, then penalties will apply,” Miller said.

“There's nothing necessarily controversial within those determinations or those policy statements from an ATO point of view, and it's not a priority for them to do but hopefully we'll see something happening in that area, too.”

Aaron Dunn, CEO of Smarter SMSF, said in the consultation process around this particular issue, the SMSF Association had asked for more detailed examples to help SMSF trustees understand what ‘levers’ the Commissioner may be able to use for inadvertent breaches.

“The SMSFA talked about what happens if you breach the transition to retirement 10 per cent and it was an error that was made by an APRA-regulated fund when we know the closer the relationship that applies in the context of an SMSF,” he said.

“The ATO has its practice statements to assist in those circumstances, but the SMSFA was asking for feedback.”