Some new comments on the ATO's website have caused some commentators to query whether the ATO has relaxed its position on running a business in a SMSF.
In fact, the ATO's view is consistent with its past musings, and compliance with the relevant super laws remains the key.Robert Green
Some observers have commented that the ATO may be softening its approach to SMSFs running a business. Their comment is based on a page on the ATO website which states that:
Maddocks considers that — on the information available — the ATO has not changed its view. Incidentally, Maddocks advises that the recent ATO comments do not require a change to the Cleardocs SMSF deed.
The ATO's previous position on SMSFs running a business was summarised in its (now outdated) publication Self Managed Superannuation Funds - Roles and Responsibilities of Trustees:
Importantly, even under this old view of the ATO, the ATO never went so far as to say that SMSFs running a business would contravene the SIS Act or Regulations.
The ATO's current publication Running a self-managed super fund - Your role and responsibilities as a trustee does not contain the above statement. It doesn't discuss SMSF's running a business except to say that:
However, the page on the ATO's website entitled 'Carrying on a business in a self-managed superannuation fund' outlines the ATO's current view on this issue. In short, the ATO's view is that:
This statement is not a green-light for SMSF trustees to start running a business through their SMSFs without regard to the regulatory provisions.
SMSF trustees still need to observe the sole purpose test and the other regulatory provisions including:
It is also worth emphasising that the relevant provisions in the SIS Act have not changed. Also, although some commentators have referred to an ATO ruling, the ATO has in fact not released a ruling on the topic).
Maddocks considers that the broad general powers given to the Trustee under an SMSF deed are sufficient to engage in the activities necessary to run a business. However, any general powers of the trustee are subject to superannuation law generally, including strict compliance with the sole purpose test and the other regulatory provisions.
In any event, Maddocks recommends that you should seek advice before deciding to run a business through an SMSF.
For questions or more information about the above article, please call Maddocks in Melbourne (03 9288 0555) and ask for a member of the Superannuation Team.
You can read other articles concerning superannuation and SMSFs here.
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Paul is a Senior Associate in the Maddocks Commercial team with particular expertise in commercial agreements for the supply of goods and/or services, the Personal Property Securities Act 2009, the National Consumer Credit Protection Act 2009 and the National Credit Code and the Australian Consumer Law.
Paul's key areas of practice include:
Before joining Maddocks, Paul was employed for 13 years with the Victorian Department of Justice, principally as a Deputy Registrar in the Victorian Magistrate's Court, but also as a legislation, policy and project officer for the Department.
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