Sir Ninian Stephen Lecture 23 May 2024

Equity Trustees have now released the paper presented by Peter Bobbin in Sydney on 23rd May 2024, titled Super Tax Death Strategies; Tax Scheme or Clever Planning?

Peter’s paper is a timely reminder as we approach the 30th June that superannuation withdrawal and contribution strategies are subject to both the sole purpose tests (plural) in Superannuation law as well as Part IVA of the Income Tax Assessment Act 1936 (ITAA).

The Sole Purpose Test is designed to ensure that each investment made or action undertaken by a Self Managed Super Fund (SMSF) is for the sole purpose of providing retirement benefits or death benefits to the Members of the SMSF and their successors.

Sole Purpose Tests apply to both Trustee and Member conduct. If a superannuation trustee strategy is too heavily focused on tax benefits, it will contravene Part IVA of the ITAA. This regulation is sometimes overlooked, either because of a lack of education or misinterpretation of the rules.

Problems arise when the superannuation strategy prioritises the tax considerations of non-dependents over superannuation law. When this happens, there are significant risks for the trustee of the superannuation fund, the member, the executor and the beneficiaries of the death benefit.

Peter reminded both practitioners and clients that all superannuation operational and succession strategies should be reconciled and explained by reference to a superannuation law dominant strategy. His case studies are recommended readings for advisers and superannuation members alike.

Expert professional help should be sought out if there is any concern about the probity of any superannuation operational strategy for a person. We work closely with recognised taxation and superannuation specialists to support our clients.