Issue: 186
Sent: 10-11-2009 10:41:02
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Managing Transitions: The New ChallengeEmail Marketing Business Opportunity - Helen BairstowIs Retirement Saving in the US Really Any Different? - Part 3The Easiest way to do a Client NewsletterThe How to Book of Self Managed Super FundsWhy Warren Buffett won't buy a NewspaperTwo Issues This Week
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Two Issues This Week

Click here to buy - A How To Book of SMSF's by Tony Negline
Tony Negline

Last Wednesday the ATO released a draft SMSF Determination on trauma insurance and the Sole Purpose Test.

This is an important issue. In essence the draft determination says that a super fund trustee can purchase trauma insurance if any claim proceeds are paid into the fund and then only released from the super system under normal preservation rules (eg temporary disablement, permanent disablement or terminal illness).

Trauma insurance inside super has been a running problem for most of my working life.

As is well known many years ago the Australian Prudential Regulation Authority released a Circular which questioned whether trauma insurance inside super would be a Sole Purpose Test breach.

It's probably reasonable to assume that APRA have signed off on this new ATO draft determination.

It will be interesting to see its long-term impact especially in relation to business succession agreements. Perhaps this could be an area the final determination could look into.

Anyway the determination is in draft form. The final one is not expected for sometime.

Last Saturday the ATO released the minutes for the September meeting of the National Tax Liason Group Superannuation Technical Sub-group.

As always with these meetings important issues are raised.

For example one person asked, "If a fund trustee fails to physically pay sufficient pension payments to meet the minimum pension obligations under SIS Regulation 1.06, is it acceptable for the fund to accrue the shortfall in its financial statements and ensure that this additional amount is paid in the following year?"

The person asking the question suggested that accrual of the income payment would make good commonsense.

In an initial response the ATO said NO, both from a fund tax perspective and a super law compliance perspective.

Obviously this is an important point for many pension paying Self Managed Super Funds.

Finally there is an interesting discussion about GST and financial advice fees for SMSFs. Unfortunately limited space forces me to examine this issue in an article on another occasion.


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