Guidance for SMSFs about transitional Capital Gains Tax (CGT) relief

ATO has published Guidance for SMSFs about transitional Capital Gains Tax (CGT) relief.

You should read this information for:

• detail about eligibility for the relief
• detail about how the CGT relief provisions operate, including how they apply to an SMSF paying a transition-to-retirement income stream (TRIS)
• examples about how CGT relief applies depending on the method used to calculate the fund’s exempt current pension income.

What is transitional CGT relief?

Transitional CGT relief is available for SMSF trustees who adjust their asset allocations to comply with the transfer balance cap and TRIS reforms, which commenced on 1 July 2017.

The relief ensures that, for certain assets that were supporting superannuation income streams in retirement phase before 1 July 2017, an SMSF trustee can still receive a tax exemption on capital gains accrued but not realised.

What you need to do

The CGT relief is not automatic. You need to apply for it and once you do, you cannot change your decision.

If you are eligible for the relief and do choose to use it, you need to advise us on or before the day you are required to lodge, by completing the CGT schedule to the 2016-17 SMSF annual return.

As we have previously advised, the lodgment date for the 2016-17 SMSF annual return has been extended to 30 June 2018 for all SMSFs. This means SMSFs trustees have until then to lodge a return with an election for CGT relief, or amend a previously-lodged return to include an election if you hadn’t already made one.

Should you have any questions, please feel free to contact us.