In an article for the Sydney Morning Herald, Sally Pattern talks about the notification that the Australian Tax Office has sent to over 2,000 SMSFs, citing that they have engaged in the unethical strategy of dividend washing.
Unethical strategy of dividend washing
ATO feels that dividend washing was always a technique which the DIYers could use and it’s just that they have brought this off-the-fringes stuff to the mainstream area. Shareholders are doubling their franking credits on a single parcel of shares. Imagine one and the same investor selling his share of ex-dividend and then rushing for the market to buy the amount of shares sold (cum dividend) and in the process, lapping up franking credits twice.
ATO bothered with other things, too
This is exactly where the scenario becomes an open-fire case for the ATO. Amidst other concerns, SMSF trustees using their funds to procure residential properties certainly top the list. The ATO is bothered about an SMSF buying a residential unit and then using it to house a member of the SMSF.
Not paying tax returns in time
Off the note, it is nothing short of a crime, says the article — about 22,000 members had not chosen to file their income tax returns timely and were lagging behind by a year or two. From here on, the ATO will be more purposeful in scrutinising those SMSFs which are in the red with the auditor contravention reports, too.
You can read the original article here.
So, the moral of the story is that you need to be sure about the rules and comply, so any current and future crack-downs will not affect you. You can contact me at SMSF Advice Hub if you find anything even remotely incomprehensible about your SMSF. I will be glad to help.
