ATO clarifies SMSF borrowing issues

ATO/self-managed-superannuation-funds/SMSFs/self-managed-super-fund/australian-taxation-office/SPAA/smsf-trustees/superannuation-industry/income-tax/SMSF/chief-executive/

24 May 2012
| By Staff |
image
image
expand image

The Self-Managed Super Fund Professionals' Association (SPAA) has welcomed an Australian Taxation Office (ATO) ruling clarifying the status of borrowing arrangements around single assets.

The ATO ruling, handed down yesterday, has effectively ended some of the confusion associated with amendments to the borrowing rules with respect to self-managed superannuation funds (SMSFs) introduced in July, 2010.

Welcoming the ATO's clarification, SPAA chief executive Andrea Slattery said the ruling had clarified what was meant by a 'single acquirable asset' and what constitutes repair or maintenance of an asset.

"The Tax Commissioner's interpretation of these terms has provided a common sense and practical solution to legislation that could be read far more strictly," she said.

Slattery said the ruling would make life easier for both SMSF trustees and their advisers.

She noted that the ruling had also severed the link between the Superannuation Industry (Supervision) Act (SIS Act) and an earlier tax ruling on whether particular costs for repairs could be treated as capital and income.

"The purpose of the limited recourse borrowing arrangements is different to the income tax law, which is to restrict the use of the amount borrowed," Slattery said.

She said the examples provided by the ATO made it clear that the amount borrowed could be used to repair an asset, but where there was an improvement the cost had to be obtained from other sources such as the superannuation fund.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months 1 week ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks 1 day ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

2 weeks ago

One licensee has lost 27 advisers in the past week, now sitting at zero, according to the latest Wealth Data figures....

3 weeks 1 day ago

TOP PERFORMING FUNDS