REGULATION ROUND-UP Valuation Guidelines for SMSFs
Director identification numbers
ATO Guide
Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019
In the current COVID-19 period, valuing assets of an SMSF may be more complicated, but it is still important to ensure all assets are appropriately valued. The ATO has released a guide to help SMSF trustees, replacing Superannuation Circular 2003/1. The regulator has provided assurance that if the guide is followed, the valuation provided will be accepted.
Downsizer contributions Louise Biti Director, Aged Care Steps Aged Care Steps (AFSL 486723) specialises in the development of advice strategies to support financial planners, accountants and other service providers in relation to aged care and estate planning. For further information refer to agedcaresteps.com.au
Treasury Laws Amendment (2019 Measures No 3) Bill 2019
If a property is transferred from one spouse to another for nil consideration, market value provisions are applied to create capital gains obligations, but this will not allow other investments to be used to make a downsizer contribution. The Treasury Laws Amendment (2019 Measures No 3) Bill 2019 clarified the ATO opinion previously expressed in Law Companion Ruling 2018/9, which deemed capital proceeds cannot be used.
From 12 June 2022, an extra step will be required when setting up a corporate trustee for an SMSF or appointing a new director. All directors of registered bodies will need to obtain a director identification number (DIN). A DIN will be a unique number issued to the individual person, and once issued will remain with them for life. The same number will be applicable for all director roles held by that person. In the first year of operation, the director will have 28 days from appointment to obtain a DIN. After that time, directors will need a DIN before they are appointed. The requirement will apply to all existing directors, including alternative directors.
Deferred ECPI measures The start date for changes that will allow an SMSF to choose which method of exempt current pension income can be applied and negate the need for an actuarial certificate if the fund is fully in retirement pension phase has been deferred by 12 months to 1 July 2021.
Accounting standards AASB 2020-2
Auditing impacts from COVID-19
Amendments to Australian Accounting Standards (AAS) will impact on reporting requirements for SMSFs that create or amend the trust deed from 1 July 2021. If the trust deed of these funds includes a clause requiring the preparation of financial statements that comply with the standards, the fund will no longer be able to prepare special purpose financial statements, but will instead need to prepare Tier 2 general purpose financial statements. The AAS Board has published a key facts document to explain the implications.
Auditor contravention reporting instructions: addendum
Changes to contribution rules Superannuation Legislation Amendment (2020 Measures No 1) Regulations 2020
Legislation is effective from 1 July 2020 to increase the age at which the contribution work test starts from 65 to 67. The age limit for a spouse receiving spouse contributions has also increased from 69 to 74.
Non-arm’s-length income provisions Practical Compliance Guideline 2020/5
The ATO has released Practical Compliance Guideline 2020/5, which confirms compliance resources will not be allocated to determine whether non-arm’s-length income provisions apply to non-arm’s-length expenditure if it has sufficient connection to all ordinary and/or statutory income. This is a transitional approach that applies for the 2019 and 2020 financial years, but has also been extended to the 2021 fiscal year while the ATO finalises Law Companion Ruling 2019/D3.
Instructions regarding auditor contravention reports have been amended through the addition of an addendum to cover five areas of relief introduced due to the COVID-19 pandemic for 2019/20 and 2020/21. The instructions provide guidance to identify when a breach occurs and when it needs to be reported for providing rental relief, loan repayment relief, in-house asset relief, market valuations, and early release of super on COVID-19 compassionate grounds. The SMSF independent auditor’s report instructions have also been updated to reflect these instructions.
Intermediary LRBAs Superannuation Industry (Supervision) Inhouse Asset Determination – Intermediary Limited Recourse Borrowing Arrangement Determination 2020
An SMSF investment that was acquired under limited recourse borrowing arrangement (LRBA) provisions and is held within a holding trust will be exempt from classification as an in-house asset if the intermediary LRBA meets the requirements described in the ATO’s Superannuation Industry (Supervision) In-house Asset Determination – Intermediary Limited Recourse Borrowing Arrangement Determination 2020. Application has been backdated to apply to all intermediary LRBAs established from 24 September 2007.
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