Sent: 30-03-2010 10:52:15
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ATO Taxpayer Alert on Excess Contributions
Yesterday the ATO released a Taxpayer Alert about excess super contributions and using the provisions of the super fund trust deed to avoid the payment of excess contributions tax.
The terms of the super fund's trust deed are amended to force any excess contributions into a separate trust and then repays those contributions.
There are many questions about this particular scam. But for my purposes these issues are not my major point that I wish to make here. In truth the ATO do a good job in detailing most of the major issues in its Taxpayer Alert.
Overall it's good that the ATO are moving against this sort of nonsense.
What interests me the most about this issue is that it once again shows the importance of a super fund's trust deed.
The wording of the trust deed is one of the most critical document any trust can have. There is a growing level of interest in how far the general compliance clause (ie the "we won't do anything which stops our fund getting tax concessions" clause) and the catch all clause (ie, the "we can do whatever the super laws allow us to do" clause).
Some have argued that the general compliance clause and the catch all clause are all that you need for fairly irregular trust deed updates.
Others argue that a trustee must have specifically defined powers otherwise their terms of trust provide no definite power.
This is a complex area and the lawyers will argue their points of view for many years.
So what is a SMSF trustee meant to do? Given the level of tax concessions that attach to superannuation, and for most people the significant amount of money involved, it seems to me that the best course of action is a reasonably conservative approach.
But what is a conservative approach? Most of the recent court cases involving super funds have spent considerable amounts of time dealing with the actual wording of the trust deed to determine what powers or responsibilities a trustee might have had or might not have had.
What does this tell you about a conservative approach?
Finally please consider purchasing a copy of my book. You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne
Two options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb
You can read the ATO's taxpayer alert at: http://www.atcbiz.com.au/r.php?r=jujgj3c
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