CEO of the Noah Group, Brett Marks, believes the Australian Tax Office is stepping up its focus on self-managed super funds and has warned trustees of these funds to beware.

The Noah Group has a range of Licensed Professionals that work using the new SMSF industry rules allowing a process where Noah Group clients can set up their own SMSF and leverage into property. If you have around $120,000 in Super, the Noah Group can show you how to leverage that to purchase investment property through your own property trust. This process has only been formally allowed in Australia, since revisions to the SIS Act in September 2007, and offers the opportunity to turn your under achieving super into potentially great returns which you have full control over.

A long list of legal contraventions by trustees and funds are to be reported by fund auditors to the tax office as of the 1st of July, 2008, says the Noah Group.

Two of these contraventions include providing financial assistance to members or their relatives and the breaching of the sole purpose test (that requires funds to be maintained for the core purpose of providing retirement and death benefits for members).

Other contraventions by new funds that are automatically reportable to the ATO include borrowing from a SMSF (certain exceptions exist for short-term loans), failing to purchase assets on an arm’s length basis, and exceeding the in-house asset ratio. (With exceptions, funds are not permitted to invest more than 5% of their assets (the in-house asset ratio) with related parties. This restriction includes the leasing of most fund assets to related parties).

The tax office is becoming better equipped to concentrate more of its efforts on new trustees who are failing to comply with superannuation laws. And they are creating an opportunity to stamp out bad habits early.

The Noah Group says that findings by a recent tax office survey of new trustees and highlighted by Smart Investing on several occasions, showed that 30% of those surveyed could not explain the most fundamental of all SMSF rules, the sole-purpose test. And a quarter of new trustees surveyed were unaware of restrictions on the type of assets that their funds could acquire.

Understandably these findings have been a rude shock to Minister for Superannuation, Nick Sherry, as well as many senior tax officials.

The Noah Group says that it is very important when using a SMSF to have your Financial Planner and Accountant involved in your investment structure to make sure you do not fall into the trap of not fulfilling you obligations under current taxation acts.