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ATO focus areas for superannuation fund tax

ATO focus areas for superannuation fund tax

Damian Ryan and Bernard Finnegan discuss the ATO's approach to significant financial services tax issues.


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At the recent Financial Services Taxation Conference, hosted by The Tax Institute, Jeremy Hirschhorn, the Deputy Commissioner Public Groups, Australian Taxation Office (ATO), addressed the conference in relation to the ATO's approach to significant financial services tax issues.

As part of this presentation, Jeremy outlined the four key areas of focus in relation to superannuation funds, namely:

  • propagation (and de-propagation), in particular the application of PCG 2017/D6
  • data integrity from underlying investment systems
  • increased non-portfolio offshore investments
  • accelerating shift of assets to pension phase.

In relation to the first and fourth issues, the ATO concern is really with respect to the integrity of the various tax parcel selection methodologies applied by the funds.

The second issue, in relation to data integrity, has been on the ATO radar for some time now in the context of tax risk management and the need to demonstrate appropriate controls and processes, particularly for Key Taxpayer Engagement (KTE) taxpayers, and will no doubt receive a greater level of scrutiny as part of the upcoming "Justified Trust" reviews.

The focus on the tax treatment of non-portfolio investments is unsurprising given the increase in non-portfolio investments by the larger funds. The focus here is really on the correct tax characterisation of both the offshore investment vehicles and the investment returns (examples include the treatment of Corporate Limited Partnerships under TR 2017/D4 and Foreign Trusts under TD 2017/23 and TD 2017/24). It also dovetails neatly into the second issue in relation to data integrity, with a growing expectation for funds to understand the tax consequences of the underlying investment and not just rely on the custodian reporting.

KPMG is working closely with our clients on these ATO areas of focus.

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