Legal news
As noted previously, the recent Administrative Appeals Tribunal (AAT) decision of BPFN and Commissioner of Taxation (Taxation) [2023] AATA 2330 (28 July 2023) (BPFN) had struck a blow to the ATO’s strict approach to non-arm’s length income (NALI) and taken a more general commercial approach to NALI.
In the decision of Mackie v Commissioner of Taxation (Taxation) [2024] AATA 619 (3 April 2024), the Administrative Appeals Tribunal (Tribunal) affirmed the decision of the Commissioner to decline to exercise the discretion in section 291-465(1) of the Income Tax Assessment Act 1997 (Cth) (ITAA 97) to disregard or allocate to another year the taxpayer’s concessional superannuation contributions.
In the decision of Kirk as trustee of the Property of Smith (a Bankrupt) v Smith [2024] FCA 240 (15 March 2024) the Federal Court held, among other things, that a transfer of superannuation from the husband to his wife’s superannuation was no longer protected as an interest of the bankrupt in a regulated super fund under section 116(2)(d)(iii)(A) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act).
In the decision of Tratter v Aware Super [2024] FCAFC 36 the Full Federal Court dismissed the appeal by the deceased super fund member’s mother against the super fund trustee’s apportionment of 30% to the mother and 70% to the deceased’s de facto spouse.
In the decision of Stern v Commissioner of Taxation [2024] FCAFC 21 the Full Federal Court found against the taxpayer, who raised an argument that Division 294 of the Income Tax Assessment Act 1997 (ITAA 97) should not be interpreted such that both his pension was to be commuted under a commutation authority issued by the Australian Taxation Office (ATO) due to his pensions exceeding his transfer balance cap, and that he also must pay excess transfer balance tax for exceeding his transfer balance cap.
The NSW Supreme Court decision of Cihan Family Trust v Cihan Family Superannuation Fund [2023] NSWSC 1289 found that a transfer of land from a family trust to a SMSF should be reversed on the basis of unconscionable conduct of a son against his father.
The case of Corbisieri v NM Superannuation Proprietary Limited [2023] FCA 1319 involved an appeal by the mother of a deceased against the decision of the Australian Financial Complaints Authority (AFCA) to uphold a BDBN to benefit the de facto spouse of her late son, which was to be funded out of life insurance proceeds in AMP Superannuation.
In this Judgment of the NSW Supreme Court, a binding death benefit nomination (BDBN) signed on the date of death of the sole member of a self managed superannuation fund (SMSF) was upheld. Challenges to the BDBN’s validity, by the SMSF trustee and two of the deceased’s executors, based on lack of capacity and unconscionability both failed.
Further to previous announcements, Treasury has released draft legislation for the additional 15% tax on $3M+ balances. While the measure is called the “Better Targeted Superannuation Concessions”, the tax itself is destined to be known as the (uninspiring name of) “Div 296 tax”.
In the recent decision of Geelong Turf Company Pty Ltd and Commissioner of Taxation [2023] AATA 1718, the Administrative Appeals Tribunal (AAT) upheld super guarantee charge (SGC) assessments issued by the Commissioner of Taxation (Commissioner) and refused to remit the 100% SGC Part 7 penalties.
The ATO’s attacks on SMSFs conducting property development continues! The ATO has released Taxpayer Alert TA 2023/2 (the Alert) confirming that the ATO will review arrangements where related entities of a SMSF are conducting a property development (or including where property development is undertaken on SMSF owned assets) and where a special purpose vehicle (SPV) is used. The SPV being a company or trust which will be a related party to the SMSF through which generally a member of the SMSF may provide property development services to the SMSF for a commercial arm’s length fee and acquire and manage building materials used for the development.
