Super Tax Story Slammed
I take issue with your syndicated story in the 3rd July edition entitled ‘Young farmers “Locked out” by proposed super tax’. The article – effectively an opinion piece – was printed without editorial comment nor scrutiny.
Perhaps a brief look at superannuation rules and policy wouldn’t go astray.
The ATO which oversees Self managed Super Funds clearly explains the Sole Purpose Test, namely “The sole purpose of your SMSF is to provide retirement benefits to your members, or to pay death benefits if a member dies before retirement.” i.e. NOT a tax-favourable means of transferring wealth through generations. Bear in mind there are other ways to do this (eg a Will).
The ATO goes on to further clarify the rules with the text “Generally, it is illegal for anyone to benefit from the SMSF outside of this sole purpose. It can be illegal to: … use the SMSF’s assets for personal use.” So a primary producer cannot have their farm in a super fund and also live off the proceeds (use the SMSF’s assets) without breaching there rules. Arguably the only people able to transfer a farm or other assets (yachts, art works) to such a scheme are those with extensive alternate means of support.
Bear in mind the changes only apply to any part of SMSF assets over $3M, whereas the median super balance on retirement is well below one-tenth of this (less than $300k). So don’t believe it when they cry poor.
J. O’Brien