Application of CGT relief causing trustee confusion

While most SMSF trustees are aware of the capital gains tax relief provided by the super reforms, some are under the false assumption the relief is automatic, according to Perpetual.

Perpetual Private head of strategic advice and professional development Colin Lewis says there are many decisions SMSF clients need to make in the lead-up to 30 June, but many trustees are confused on some of the finder details relating to the CGT relief.

“I think the biggest thing people need to realise though is that it’s not automatic. It is an irrevocable election that needs to be made and that can be done any time up until the fund’s return goes in for the 2017 year,” Mr Lewis said.

“This is something that needs to be thought about and decisions need to be made.”

He said SMSF trustees are also confused by how the timing of when the CGT relief applies will also differ based on how the assets in their fund are structured.

“Depending on whether the fund uses the segregated or proportional approach will dictate whether when the relief applies from,” Mr Lewis said.

“For example, CGT relief on the segregated assets applies anytime from 9 November to the 30th of June, whereas if it’s unsegregated or proportionate, it will apply on the 30th of June and then a decision needs to be made as to whether you apply for the current year or whether you defer.”

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