“It’s one thing to say that you can’t enter into a scheme that is purely driven to avoid tax, but it’s quite an extension to say that you only have CGT relief if you needed to take a particular course of action to comply with new laws,” Ms Heffron told SMSF Adviser.

This interpretation by the ATO would potentially prevent someone with a transition to retirement pension, who is segregating their assets, from claiming the CGT relief.

“They don’t actually need to do anything to comply with the new rules. They could just leave everything exactly as it is and accept that next year’s tax outcome won’t be as good as this year’s,” Ms Heffron said.

“But they might well decide to stop segregating their assets some time before 30 June 2017 because there’s no need to do so in the future [as] it has no impact and it’s currently costing them extra in accounting fees.”

The provisions of the new legislation would have given them access to the CGT relief in these circumstances, Ms Heffron explained, even though they actually don’t have to do anything to comply with the new rules.

“Based on that LCG as it is currently written, I think the ATO envisages very few people taking advantage of the CGT relief, whereas I think the way the law was written suggests that it is open to a lot of people,” she said.

“I think the ATO is taking a very narrow view of who’s eligible so I think you’re at risk of ATO scrutiny.”