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Tax myths encourage SMSF establishment
The perpetuation of myths around the tax status of Self-Managed Superannuation Funds (SMSFs) carries with it the risk of adverse unintended consequences, according to Chartered Accountants Australia and New Zealand superannuation specialist, Liz Westover.
Westover has pointed to the fact that the SMSF industry has had to fight off a number of myths and misconceptions, including that SMSFs operate under special tax laws.
Westover said that such misconceptions had been perpetuated by people who should know better and had gained momentum because the flow of funds into the SMSF sector had been a well-documented concern of the larger funds for some time.
"There are no special tax laws for SMSFs," Westover said. "The tax rules are the same for all superannuation entities."
However she said the advantage that SMSFs had was that they were often able to manage the rules more efficiently than their larger counterparts and cited the example of sale of assets for capital gains tax purposes or the timing of investment transactions with pension commencement.
Westover said an inadvertent outcome of the perpetuated tax myth around SMSFs was that it was driving people into either establishing an SMSF or to make enquiries about establishing an SMSF for tax reasons.
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