By Vicky Richards
Check the rules before you act.
Running your own self-managed superannuation fund can deliver some extremely valuable benefits including control over how your super is invested. However, together with a long list of benefits comes a very strict set of rules the SMSF needs to comply with in order to receive concessional tax treatment.
A significant breach of these rules, which are administered by the tax office, can result in your fund being declared non-complying. Once a fund is found to be non-compliant it loses access to the concessional 15% rate of tax and instead is taxed at the top marginal rate of 45%.
An additional penalty is applied in the year in which a fund becomes non-complying. The market value of the assets of the fund, less any undeducted contributions, are subjected to a 45% penalty tax.
This effectively recoups all previously allowed tax concessions even during the periods the fund was complying.
To avoid this situation a basic rule of thumb for a hassle-free life when running an SMSF is to keep its operations completely separate from your personal and business affairs. The sole purpose of an SMSF is to provide benefits for members in retirement. An SMSF should not be used to invest in, or to loan monies to members or related parties.
Our specialist SMSF team is available to answer any questions you may have in regards to the compliance of an investment or transaction you are considering. If a non-arm’s length party is involved in any way, please ensure you phone WDF Professional for further advice.
Director
Avoid These Common Accounting Mistakes in Your Business
Starting a business can be challenging, especially when it comes to managing your finances and staying on top of your numbers. So, what are the most common accounting mistakes made by business owners? And what can you do to avoid these pitfalls and keep your finances healthy and in good order? Read More…
Using company money and assets for personal use or benefit?
The ATO regularly publishes focus areas for small businesses. One of the top areas where the ATO regularly sees errors is where a private company shareholder or associate uses business money and assets for personal use or benefit, which can lead to Division 7A issues. Read More…
How to find Government Grants and Support
Government grants and incentives are a great way to boost your capital. We’ve highlighted some current areas of financial support that your business may be eligible for. Read More…