Diverting personal services income to Self-Managed Super Funds (SMSF)

The ATO is reviewing arrangements where individuals at, or approaching, retirement age purport to divert their personal services income to an SMSF, so that the income is taxed concessionally (or exempt from tax) in the fund, rather than being subject to tax at the individual’s marginal tax rate.

These arrangements normally involve the individual’s income being paid to another entity, for example a company, which then makes distributions to the SMSF as a ‘return on investment’. For example, dividends, where the SMSF holds shares in the relevant company.

The ATO advises any people that have entered into such an arrangement to contact them by 30 April 2017, so they can resolve any issues together, and minimise the impact on the individual and the fund.

• Kothes has the only SMSF specialist on the Far South Coast. If you have questions about how this ATO review might impact you, please contact Director Gary Skelton in Financial Planning at Bega on 6491 6491.