Earnout Arrangements: New "Look-Through" CGT Treatment

The Tax Office has released a Ruling explaining the Commissioner's views on how a person who holds an enduring power of attorney in respect of a member of a self-managed superannuation fund (SMSF) can be a trustee in place of the member (or a director of the corporate trustee) for the purposes of the superannuation legislation.

The Tax Office has also released a Determination in which it sets out the circumstances where a trustee of an SMSF can purchase a trauma insurance policy in respect of a member and still satisfy the superannuation legislation, in particular the sole purpose test.

The Super System Review has released its preliminary report, Self-Managed Super Solutions, which contains a host of recommendations. While the Government has not responded to the recommendations, if implemented, they will impact on the SMSF landscape.

The report makes some of the following key recommendations:

·         Exotic assets prohibited — Investments in collectables and personal use assets should be prohibited, such as paintings, jewellery, antiques, wine, exotic cars and yachts.

·         In-house assets prohibited — SMSFs should be prohibited from any in-house assets. (In brief, an in-house asset is an asset of the fund subject to a lease or lease arrangement between the trustee of the fund and a related party of the fund)

·         Leverage and instalment warrants — A review of the borrowing exception (ie instalment warrants) should be carried out in two years to ensure that borrowing has not become a significant focus of SMSFs.

(for more recommendations click Header)