The capital gains tax (CGT) relief provisions contained in the super reforms are an issue of which SMSF advisers have to be aware, not only for existing clients but for newly acquired clients as well, according to a technical expert in the industry.
“Part of your procedures going forward when you pick up a new SMSF client with an existing fund is to determine if the trustees have then applied CGT relief in the 2016/17 year,” SuperConcepts SMSF technical services executive manager Mark Ellem told the recent selfmanagedsuper SMSF Professionals Day 2017.
While Ellem suggested advisers would have to include this process in the future, he pointed out it could present more of a challenge than would appear on the surface due to the records practitioners would need to rely on.
“A lot of that will be determined on what the trustee’s records are and what their administrator’s or accountant’s records were,” he said.
“That’s because what will be reported to the tax office will not be the full details.”
He emphasised the information reported to the ATO about an SMSF invoking the CGT relief provisions lacks detail as it only includes whether relief has been taken, the resulting notional gain and the amount deferred.
It means the trustee’s records and not the ATO’s will be what advisers need to rely upon for the detailed information required in these cases.
Ellem also stressed when the value of the CGT relief is being calculated, advisers needed to acknowledge no additional elements to the price should be included.
“One thing to note is that when we’re looking at value, the Law Companion Guide on CGT relief issued by the ATO notes it’s a market value exclusive of GST (goods and services tax),” he said.
“So even though GST might be applicable to the sale of a property in the fund, if the fund is registered or required to be registered for the GST, that’s when we’re looking to place the value on that asset as at 30 June 2017 that it’s the GST exclusive value.”
