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CGT relief quirk creates more headaches for accountants

CGT relief has been a major point of contention for accountants with SMSF clients, and an emerging issue with hybrid securities is creating further confusion.

SMSF Miranda Brownlee 12 October 2017
— 1 minute read

Professionals and their clients are facing difficulties in determining whether certain types of hybrid securities are eligible for the CGT relief or not, according to SuperConcepts’ executive manager of SMSF technical and private wealth, Graeme Colley.


One of the issues SMSF practitioners are seeing with CGT relief at the moment is whether certain types of hybrid securities are regarded as traditional securities or not, which affects their eligibility for the relief.

“You’ve got things like term deposits which are traditional securities so you don’t get a reset for that, but then other hybrids have different features about them and some might be traditional securities and some may not,” explained Mr Colley.

“You really need to look at the prospectus and whether there is a class ruling from the ATO to work out if it meets the definition of a traditional security or not.”

Mr Colley said it was important to determine whether the hybrid securities in the SMSF are eligible for CGT relief in case the client wants to take advantage of the opportunity to reset the cost base of those assets.

Hayes Knight recently found across the audits received for the 2016/17 financial year so far, there have been errors in around 70 per cent, which all relate to the incorrect implementation of the CGT transitional rules.


CGT relief quirk creates more headaches for accountants
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Miranda Brownlee

Miranda Brownlee

Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.