It's almost a month since the ATO issued Taxpayer Alert TA 2010/2. Entitled "Circumvention of Excess Contributions Tax", it warns taxpayers that the insertion of specific provisions in SMSF trust deeds which create a separate trust to hold amounts which, if treated as contributions, would cause the contributions caps to be exceeded.
The Alert questions the effectiveness of these arrangements (presumably from a legal perspective) but is very short on legal arguments against such arrangements. The Alert also appears to make adverse assumptions about the motives for including these provisions in the deed.
The reality is that these clauses are included in SMSF deeds for much the same reason as many other provisions are included in deeds - to ensure compliance with, and to prevent inadvertent breaches of, the SIS Act and Regulations.
What is most concerning about the ATO's approach on this issue is what it says in a more general sense. The Commissioner, in responding to concerns about the harsh outcomes regarding excess contributions, has consistently responded by pointing out that the legislation gives the ATO no room to move. The impression that the ATO seems to have wanted to convey is 'We'd love to help, but our hands are tied'. However, when presented with an approach that provides both a practical and technical solution, the ATO has preferred to maintain the hard line, without any technical backing. It begs the question: has the ATO been genuine in their concern about their inability to be flexible on this?
Several submissions have been made. The ATO's response will be interesting to observe.
No comments:
Post a Comment