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Tax consultant provides clarity on in-specie transfers

A tax consultancy business has shed light on what the ATO’s interpretation is likely to be on the use of in-specie transfers as part of the CGT cap for small businesses, following the budget reforms.

Tax&Compliance Miranda Brownlee 16 August 2016
— 1 minute read



Tax consulting and educational training provider Darren Wynen from TaxBanter says that following the announced budget changes, the ATO has received a number of private binding ruling applications regarding the interaction of in-specie transfers with the CGT cap.

While the government has confirmed CGT cap amounts will not be counted towards the non-concessional lifetime contribution cap, it is unclear whether part of a property can be transferred into an SMSF via the small business CGT cap as an in-specie transfer.

“There has been some uncertainty in terms of how the ATO would interpret this, so a lot of people have been writing in to the ATO to seek rulings on whether their in-specie contribution, instead of being a non-concessional contribution, can count against this lifetime [CGT] cap,” Mr Wynen told delegates at the CPA National SMSF Conference.

Mr Wynen, who has spoken with the ATO about various private binding ruling applications, said it is unlikely the Tax Office will allow this.

“The ATO, we understand, has effectively been sitting on those, and we understand that they’re going to say, ‘No, you cannot count part of that in-specie against your CGT cap’,” he said.

“The reason for this is because the transaction you’ve got that’s generating the gain is also what you’re trying to argue is going into the fund under the CGT cap as well. So what that means, potentially, is that you’ll generate the gain and then you’ll have to come up with additional cash to put into the fund.”

Mr Wynen said this would also be politically in line with the general restriction placed over super, in terms of restricting the money going into a fund.

The ATO, he said, will be providing guidance on the issue soon.

Tax consultant provides clarity on in-specie transfers
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