Legal news
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.
This paper has been built on a previous paper on the superannuation guarantee (SG) regime, titled Super Guarantee – no longer the toothless tiger. That paper was designed to take a holistic examination of the SG regime. In this paper, we have built on that approach and added a number of developments, including:
It has been a long held view of the State Revenue Office (SRO) that if beneficiary loans are forgiven in connection with a distribution of real estate from a discretionary trust to a beneficiary, then the duty exemption in section 36A of the Duties Act 2000 (Vic) will not apply and the transfer will trigger land transfer (stamp) duty.
Without consultation, the Victorian Government has introduced the State Taxation Acts and Other Acts Amendment Bill 2023 (Bill) which will make a number of significant changes.
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 Colaciello Super Pty Ltd v Christensen [2023] VSC 568 the Supreme Court of Victoria held that a loan in breach of sections 62 and 65 of the Superannuation Industry (Supervision) Act 1993 (SIS Act) was unenforceable under the defence of illegality.
The ATO has taken an aggressive approach on non-arm’s length income (NALI) for a number of years now, both in its public documents and via its audit teams. This has culminated in an approach that puts a high expectation on SMSF’s in relation to proving arrangements are on an arm’s length basis – in particular, in relation to benchmarking such arrangements.
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 recent interest rate rises will result in significant increases in the LRBA safe harbour interest rates, and the Division 7A interest rate, for the 2023/24 year. The interest rates will be:
LRBA real estate safe harbour interest rate – 8.85% (was 5.35%)
LRBA listed share safe harbour interest rate – 10.85% (was 7.35%)
Division 7A interest rate – 8.27% (was 4.77%)
Treasury has release proposed legislative changes to the non-arm’s length expences (NALE) rules. While they are not as bad as the initial proposal to take NALE at a rate of 225%, they are still not ideal.
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.
In our previous article, we discuss Revenue NSW’s announcement that it has determined that NSW surcharge purchaser duty and surcharge land tax are inconsistent with international tax treaties entered into by the Australian Federal Government and certain countries (Treaty Countries).
On 29 May 2023, Revenue NSW has updated its list of Treaty Countries to now include India, Japan, Norway and Switzerland.
The Full Federal Court, in the decision of JMC Pty Ltd v Commissioner of Taxation [2023] FCAFC 76, has effectively found that a right to delegate (unless such right is a sham) means a person will be a contractor (and not an employee) and won’t be engaged principally for their labour.
