Adequate CGT record-keeping by SMSFs

As recently reported in SMSF Adviser, practitioners and trustees have been advised they will need to maintain CGT records well past the lodgement of their annual return, and may be required to keep records in addition to the CGT schedule.

Julie Steed, Australian Executor Trustees' senior technical services manager, emphasised the importance of practitioners communicating to their clients that the record keeping obligations for the CGT relief stretches well beyond the date that the fund lodges its tax return for 2016-17, and potentially up to 10 or even 20 years into the future.

Ms Steed pointed out that, although details for listed shares will be available in past ASX records of what the price was on that day, if you do not have those records on hand, it can be time-consuming. However, for many private assets it will be critical to ensure you have those valuations for the entire period between 1 July 2017 and the time in which the fund actually sells the asset.

Jemma Sanderson, Cooper Partners director, also commented on the importance of the fund maintaining records on what assets the relief was claimed and what the CGT relief cost base is, particularly as the reset tax cost will differ from the purchase price that the fund paid for the particular asset. She also noted that the because disclosures to claim the relief in the annual return within the CGT schedule aren’t particularly onerous, someone picking it up later may not necessarily be able to see what happened if they just looked at the annual return or the financial statements.

She further emphasised the need for SMSF trustees to:

  • keep good records, good minutes and resolutions to show exactly where the relief was claimed and the outcome of that. This will be of particular importance where you pick up a new client that was previously dealt with by a different firm;
  • maintain records of the fund that confirm the final amounts that are in each member’s pension account and the different tax components; and
  • retain additional paperwork in the permanent records of the fund as well as relying on the software to maintain all the numbers.