Self-managed super fund trustees are using multiple SMSFs to manipulate tax outcomes, Australian Taxation Office deputy commissioner superannuation James O'Halloran said in his speech to the National SMSF Conference in Melbourne.
The ATO believes 13,600 trustees have more than one SMSF at a baseline level. About 35 trustees have more than five SMSFs.
O'Halloran said there are genuine reasons for setting up multiple SMSFs, including separating assets for blended or large families.
In some other genuine uses of multiple accounts - SMSF trustees also use multiple funds to separate business assets from family assets. They can also use different SMSFs for managing super for people who are in different life stages and hence might need different investment strategies.
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However, use of multiple SMSFs to "manipulate" tax outcomes is an "emerging issue," according to O'Halloran.
He gave an example of this. "If the individual repeatedly switches between accumulation and retirement phase in these funds to ensure that large gains and income are always incurred by assets in the retirement phase, achieving a greater effective tax exemption than would ordinarily be available," O'Halloran said.
He said the ATO will closely scrutinise cases of tax manipulation with multiple SMSFs, given the recent introduction of the transfer balance cap (TBC), and disregarded small fund assets provisions.
"I raise this matter because while the establishment of multiple SMSFs does not of itself contravene any regulatory provision, we are examining instances where it appears the establishment of another SMSF has been a precursor to behaviour intended to manipulate tax outcomes," he said.