The Tax Office has extended to 30 June 2018 the due date for lodging self-managed superannuation fund (SMSF) annual returns for the 2016-17 income year.
Thomson Reuters Weekly Tax Bulletin (Issue 3, 19 January 2018) reported that the ATO made this decision in recognition of the major choices that SMSF trustees need to make in this first financial year of operation of the super reforms. The ATO had received feedback that accounting and advisory firms are currently focused on helping SMSF trustees to make informed decisions in relation to the major super changes being implemented as part of the 2016-17 annual return, such as eligibility for transitional CGT relief. Accordingly, the ATO said it decided to extend the lodgment date for 2016-17 SMSF annual returns from 15 May to 30 June 2018. The extended lodgment timeframe will mean that all SMSFs who are eligible for transitional CGT relief will have additional time to make the relevant elections before the due date for lodgment of their 2016-17 SMSF annual return.
CGT relief for super reforms
Thomson Reuters Australian Tax Handbook 2018 notes that transitional CGT relief is available for complying superannuation funds (including SMSFs) with pension assets impacted by the $1.6 million pension transfer balance cap or the TRIS reforms. Broadly, a fund’s assets supporting a superannuation income stream may need to be reallocated or reapportioned to accumulation interests before 1 July 2017 to comply with the pension cap reforms. The CGT relief enables a complying fund to preserve the income tax exemption for capital gains accrued, but not yet realised, on CGT assets held by a fund throughout the period 9 November 2016 to 30 June 2017.
The CGT relief is not automatic and applies on an asset-by-asset basis. The fund must choose for the relief to apply. The choice is irrevocable and must be made by the time the trustee is required to lodge the fund’s 2016-17 SMSF annual return. The approved form for making the choice is the CGT schedule as part of the fund’s annual return.
The CGT rules are subject to different conditions depending on whether the superannuation fund uses the segregated method or the proportionate method to calculate its exempt current pension income. The rules are complex and require careful consideration against the specific circumstances of each fund.
The online version of the Australian Tax Handbook 2018 – current to 1 January 2018 – is available for online subscribers. The 2018 print edition will be available later in January – pre-order here.