Question:
Super funds – CFDs
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
Question: Can a super fund invest in CFDs? If so, what is the value of the threshold?
Answer: Contracts for Difference or CFDs are a sophisticated and fairly high risk product available to investors and traders. The Tax Office has issued two Interpretive Decisions (ID 2007/56 and ID 2007/57) which can be downloaded by visiting the Tax Office website. Essentially, a super fund can invest in CFDs if the CFD provider does not take a charge over super fund assets. You must always be sure never to mortgage or charge any super fund assets (unless undertaking a carefully documented and bona fide instalment warrant arrangement).
Whilst an excluded fund (a super fund with less than five members) does not require a formal Risk Management Statement, it should ensure that investments in CFDs are appropriately covered in its Investment Strategy. Remember also that, whilst it is appropriate for super funds to invest in various types of securities, they should do so as investors, not active traders. If a substantial proportion of super fund assets are committed to active trading, you risk the Tax Office alleging a breach of the sole purpose rule as the fund could be considered to be operating a business.
