Practical Compliance Guideline PCG 2016/5 was released on 7 April 2016 with a deadline for SMSFs to be compliant by 30 June 2016, see the following link: http://www.dunwoodielegal.com.au/safe-harbour-guidelines-for-self-managed-super-funds/
The Deadline for Compliance is 31 January 2017
SMSF Trustees will now have until 31 January 2017 to ensure that the arrangements of their SMSFs are on arm’s length commercial terms or are wound up. The ATO has stated that SMSFs with LRBA arrangements not falling within the Safe Harbour Guidelines are more likely to be selected for a review of their affairs. Arrangements that are not found to be on arm’s length terms are able to have all income earned from the investments taxed at 47%!
The ATO will not be ready by 30 June 2016 to review the LRBA arrangements of SMSFs to ensure their compliance with the Safe Harbour Guidelines in April 2016. Ensure that you and your SMSF will be.
What you need to do
You should still ensure that arrangements are reviewed well before this date to avoid last minute stress and give yourself time to make any necessary adjustments, and more importantly, effect any changes to documents and to make any payments required to ensure that you fund remains compliant. The ATO will provide further guidance on the guidelines by 30 September 2016 but it is not too early to begin reviewing arrangements now, if you haven’t already done so.
How we can help you
We are available to review SMSF LRBA arrangements for existing and new clients and provide advice on how to ensure the terms of the LRBA are on commercial terms, as determined by the ATO. We are also experienced in winding up LRBA arrangements are able to assist you with this prior to 31 January 2017. SMSF Trustees should bear in mind that the current processing times at the New South Wales Office of State Revenue have been up to, and in some cases, exceeding, a month so arrangements should be made as soon as practicable.