Contributions To Superannuation Funds Under Scrutiny, Announces ATO

by Mary Swire, for LawAndTax-News.com, Hong Kong

16 June 2008

The Australian Taxation Office (ATO) on Friday issued a taxpayer alert warning trustees and members to be cautious when moving assets other than cash into superannuation funds.

When assets other than cash are transferred to a superannuation fund, trustees must make sure that the fund accurately reports the market value of the assets and considers any other relevant superannuation regulatory issues, the tax authority cautioned.

Tax Commissioner Michael D’Ascenzo explained that the Tax Office is concerned about certain transactions designed to manipulate contribution limits to avoid paying the excess contributions tax:

“We are concerned about contributions of assets made to a fund where the market value of the asset is not properly accounted for in an attempt to avoid paying excess contributions tax."

“It is also of concern that people may try to avoid the excess contributions tax by paying expenses on behalf of their fund, or by making improvements to a fund asset without reimbursement for the work."

“We follow up on excess contributions to superannuation so people need to make sure they don’t exceed the cap or they will receive an excess contributions tax assessment," D'Ascenzo added, concluding that:

“People also need to consider any income, capital gains and fringe benefits tax implications when transferring assets.”

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