August 2023 – ATO crackdown on Trusts, Unexpected first-time debt, SMSFs & higher interest rates and more…..

The recent ATO crackdown on trusts – involving section 100A where potentially the ATO may take an unfavourable view on what were previously understood to be legitimate distribution arrangements – may have some business owners posing the question of whether trusts are still worth it in terms of a useful business structure. However, asset protection, the availability of the 50% CGT discount, and legitimately minimising the trust income are all reasons why this structure remains appealing for business owners.
Meanwhile, for the first time, many Australians are finding themselves in a position where they are being told they owe the ATO money after completing their tax return this year. A significant number of taxpayers in this position are those that are still paying off their HECS/HELP debts – many of them young Australians. We look at some myths and facts around why this may be the case.
Higher interest rates are posing challenges for SMSFs. Funds with limited recourse borrowing arrangements (LRBAs) are now feeling the impact of 10 interest rate rises since May 2022 in one hit, from 1 July 2023. This could cause cashflow issues. At the same time, higher interest rates are tempting more funds to invest term deposits and the security they offer. However, trustees need ensure that such an investment aligns with their SMSF’s investment strategy and the risk settings of each member.

Scroll to Top