SMSF tool receives industry tick

The SMSF Association has welcomed the introduction of a new ATO tool designed to help SMSF trustees and advisers remain compliant with new regulations.

The SMSF regulator's new bulletin ensures the SMSF sector is given timely updates on any new or emerging potential compliance risks stemming from superannuation regulatory and income tax arrangements.

The association, which represents 1.1 million SMSF members, says it agrees with the view outlined by the ATO on appropriate use of reserves by SMSFs. This appears in the first edition of the bulletin.

"The association concurs with the ATO's view that the use of reserves by SMSFs should only be for specific and legitimate purposes," SMSF Association chief executive officer John Maroney said.

The association also believes the ATO's move is an example of proactive regulatory behaviour.

"We believe this is an excellent example of a regulator being proactive in guiding behavior without needing to go as far as taking compliance action," Maroney said.

"In this bulletin the ATO draws attention to the use of reserves to circumvent the measures announced in the 2016-17 Budget, and offers timely advice to trustees and advisers on this issue and, importantly, how to remain complaint."

In the first issue of the bulletin, ATO commissioner Chris Jordan flagged a distinction between the needs of SMSFs and APRA regulated funds to maintain reserves, pointing out that the use of reserves by APRA regulated funds are occasionally intended to spread potential costs.

According to the commissioner however, the use of reserves by SMSFs should be in "limited circumstances and only for specific and legitimate purposes."

In the bulletin the ATO also mentions it will continue to monitor reserve use by SMSFs, and close scrutiny will be applied to unexplained increases in the creation of new reserves, as well as increases in the balances of existing reserves maintained by SMSFs.

Read more: ATOSMSF AssociationJohn MaroneyBudgetChris Jordan
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