ASFA raises concerns about related party transfers
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Samantha Hodge is a journalist with InvestorDaily, a Sterling publication.
The Association of Superannuation Funds of Australia (ASFA) has raised concerns about the exposure draft Tax Laws Amendment Bill 2013: self-managed superannuation funds and related parties, which implements the government's Stronger Super reforms.
ASFA said that off-market transfer of assets between SMSFs and related parties, where a buyer and seller can effectively be the same person, lacks transparency and could be subject to manipulated outcomes.
"The implementation of the provisions in the exposure draft, ASFA believes, will add rigour to the process and act as a mitigation to the risk of transaction date and asset value manipulation to benefit the SMSF or related party," the association said in its comment on the exposure draft.
"Whereas ASFA supports the general thrust of the exposure draft, we also recognise that a significant part of the finer detail has been left to the prescription of regulations that will occur at some point in the future."
The association notes that the new subsection 66B(3) contemplates that assets can be disposed of by a fund trustee to related parties for market value.
ASFA recommends, that in the interest of clarity, the explanatory memorandum should specifically state that this could include an in-specie transfer of that asset in consideration of the payment of a benefit from the fund.
Provided that the benefit consideration is equal to the market value of the asset, then such an in-specie transfer will satisfy the exemption in subsections 66A(3) and 66B(3), it added.