SMSF in specie contributions- at market prices

The Tax Office has provided a Media Release 2008/30 in which it alerts trustees of SMSFs who engage in what we might term sloppy practices at best or otherwise manipulative behaviour aimed at circumventing the contribution rules introduced under Better Super.

The release is referring to the transfer of assets other than cash into superannuation funds where the indicated market value of such assets is questionable, as trustees attempt to avoid paying excess contribution tax on these transactions through the use of deflated asset values. They may potentially also be ignoring certain other benefits conferred to the assets by the trustee.

We believe that trustees contributing assets to SMSFs should employ asset values that reasonably reflect current market values and that these should also be the basis for the contributions indicated in the Member Contribution Statement.

The release suggests that trustees and auditors of SMSFs concerned about such issues should seek independent advice and/or some guidance from the Tax Office. The Commissioner added that “People also need to consider any income, capital gains and fringe benefits tax implications when transferring assets.”