*A personal services business operating via a trust can pay superannuation contributions for a related employee which are in excess of the market value of the services provided by the related employee
The ATO has in a private binding ruling reaffirmed Ryan’s Case (decided in 2004) that a personal services business operating via a trust can pay superannuation contributions for a related employee which are in excess of the market value of the services provided by the related employee. The related employee was the spouse of the principal who was also being paid a market value salary for the services the spouse provided to the principal.
The ATO ruled that Part IVA did not apply as the dominant purpose in paying the contribution was to increase the superannuation balances of the spouse.
Importantly the ATO made its ruling even though the contributions made for the spouse exceeded the relevant concessional contributions cap. It was also irrelevant that the spouse intended to pay the assessed tax on the excess concessional contributions from sources outside of super.
However it was important that the spouse received no other benefit from the trust.
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