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ATO ups scrutiny of offshore super investment


The ATO is eyeing how super funds structure their “increasingly significant” levels of offshore investment, identifying two specific areas of uncertainty.

By Katarina Taurian 8 minute read

Speaking at the Tax Institute’s Superannuation Conference, James O’Halloran, deputy commissioner of superannuation at the ATO, said one area of uncertainty for the ATO is the tax treatment of offshore limited partnerships treated as corporate limited partnerships.

In particular, the tax office is looking at the meaning of ‘credits’ for the purposes of section 94M.

On this issue overall, the ATO expects publication of a draft ruling later this year.

There is also uncertainty concerning foreign hybrids, Mr O’Halloran said, and the ATO is seeking further industry consultation to address this.

“There are two identified matters in relation to foreign hybrids: whether the vehicle in question has satisfied the definitional Division 830 conditions to be treated as a foreign hybrid; and the appropriate treatment of the sale of underlying assets where investment in a hybrid is owned by a wholly-owned unit trust,” he said.

“The latter issue arises where the underlying investment is short to medium term and whether returns should be considered the outcome of ordinary business and therefore ordinary income."

Mr O’Halloran noted that the industry is requesting clarity on the Country by Country (CbC) reporting regime and how it will apply to superannuation funds.

“We are working to answer several questions raised during the consultation process,” Mr O’Halloran said.

“While the issues have proved to be more complex than initially thought, we expect to provide the necessary guidance shortly. In the meantime, funds can request exemptions from CbC reporting on a single entity basis.”

Katarina Taurian


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