These updates specifically flag artificial arrangements involving SMSFs and related-party property development ventures, which has been on the tax office’s radar for several months.

Further, the ATO will be monitoring arrangements where an individual or related entity grants a legal life interest over a commercial property to an SMSF. This results in the rental income from the property being diverted to the SMSF and taxed at lower rates whilst the individual or related entity retains legal ownership of the property.

Arrangements where SMSF members deliberately exceed their non-concessional contributions cap to manipulate the taxable component and non-taxable component of their fund balance up will also be added.

These arrangements have been on the tax office’s radar since last financial year at minimum, but adding them to this list signals a considered focus, and is an official warning to professionals in particular who are found to be promoting such structures.

A consistent theme with the structures is that they are disguised to look legitimate, which involves significant “paper shuffling” ATO deputy commissioner James O’Halloran told SMSF Adviser. They are also designed to give a taxpayer a minimal or zero amount, or sometimes a refund or concession.

Also speaking to SMSF Adviser, ATO deputy commissioner Kasey Macfarlane said while these arrangements are not entirely resultant of the superannuation reforms, they are potentially more attractive in a post-reform environment because of their ability to reduce tax liabilities and give false indications of an asset’s worth.

The move to put these items on an official watchlist is not necessarily an indication of a pervasive problem, but that the ATO will consider allocating additional compliance resources to the issues at a later date if they persist.

As the ATO has indicated on several occasions, voluntary disclosure will give clients the best shot at a favourable outcome. Penalties may not be remitted, but they have a significantly higher chance of being reduced if a trustee comes forward, versus if they are found out by the tax office.

Editor's update: You can access the ATO's official guidance here.