Warning No 1 - ATO may seek to apply Part IVA to short segregations.

The Determination raises the prospect that the ATO may seek to apply Part IVA to asset disposals where the asset was only recently segregated prior to the disposal.  Possibly the ATO is concerned by “Friday segregation and Monday disposal”.

This may be an issue where the fund had non-pension interests during the financial year so that a disposal of an unsegregated asset would have generated some assessable income.  

However, this should not be an issue if the fund in the financial year, in which the disposal occurred, only has pension interests.

Long term planning may be required in relation to the proposed disposal of any lumpy asset.  It may be necessary to ensure that the segregation decision was made some considerable time before disposal.