Dixon case could see super taxed in US (Aust and US citizens working across both countries)

Dixon case could see super taxed in US - SMSF Adviser

 

This is not new. The IRS dont recognise trusts in the way we (UK law) do. US tax law basically looks through and considers the income of the fund to be personal income and disregards the pension income as a return of the undeducted purchase price of a pension (in a simple manner) but when a employer contributes it blends so part of it is income. And salary sacrifice style arrangements from a US entity just wont fly and complicate it further. I havent seen case details but question if this is the issue. The word "super" doesnt exist in US laws and their social security isnt anything like our age or super pensions either. Our super sit in a trust until it vests. They dont accept this legal structure. That what US laws call an avoidance structure. Almost socialist in its intentions too ! So they want to tax the fund on US source principles as its not excluded by the Treaty

Changes rules with data exchange with ATO / IRS are placing more emphasis on this issue. One strategy is to quarantine any super contributions to a clean industry fund account while absent or deriving US income. And not derive contributions with a US source since SGC rules etc wont apply anyway so it would always be a non-concessional benefit

There is a similar but somewhat different position with UK pensions funds and better strategies exist for those with UK pension rights to rollover to Australian super etc It has some catches too.

I find it ironic one of the leading figures in SMSF super didnt see that coming.

 

Well anyone silly enough to set up a LIC holding US residential property ... . What a mess that has become. Dixon then runs away on stress leave or whatever. Not the Dixon Advisory of old that got me off to a good start a few decades ago. Thank you Daryl Dixon. Wouldn’t go anywhere near them now.

 

All the more reason to set something up in the Bahamas (or other tax haven)

 

I recall reading Alan Dixon stepped aside as CEO of Evans Dixon and subsequently from involvement with URF - the residential property LIC which has been discussed elsewhere. So both have stepped aside from Evans Dixon in one way or another?

 

He’s been a very naughty boy, Dad would no doubt not be happy:

 

Daryl is long past pension age lol. Don't believe he has been actively involved for a decade or so.

URF is trading at less than half the value of pre-tax NTA (f you believe that figure). It's ripe for an activist investor to come in, buy out a group of long suffering unit holders and start creating some mischief with the management rights to the fund.

 

Maybe not in the day to day running of Dixon Advisory but until recently his name / picture was prominent in promotional material for Dixon Advisory.

And
Daryl Dixon | Executive Chairman | Dixon Advisory

He seems to have gone quiet in the media etc in recent times.

 

People liked him for his no nonsense advice. I liked him for his no nonsense advice. It was simple and easy to implement yourself. Write a letter to your fund and you're done. No complex ****.

Perhaps the next generation was too focused on devising ways to maximise fees for the company as opposed to maximise returns for the clients.

Part of their spiel was that they were "independent", but you can hardly call yourself independent if you manufacture a bunch of in-house products and corral your client base into it. To compare to AMP...

You might go to a Dixon (AMP) planner who takes a fixed fee + Asset % fee (commission);
Who shovels you into a Dixon Self Managed Super Fund (AMP platform) which charges you an administration fee for the accounting and tax management;
Which then invests in a Dixon Managed Fund (AMP Managed fund), and charges you brokerage (fund entry spread) by the Dixon stockbroker;
And the Fund is then managed by a related Dixon party (AMP Capital investors) who also take a clip.

I don't see the difference between the two. Do you?

 

When we received advice off Daryl over 30 years ago we were given a few hand written paragraphs on a sheet of paper during the meeting which was essentially avoid property, save well then buy dividend paying LICs that offered good value relative to the market (ie discount to NTA). There were no online brokers back then so he gave me the name of a broker at Wilson’s who could recommend LICs offering best value at time of buying. As for his fee it was very little from memory, simply a one off fee based on an hourly charge.

I remember him showing me a chart of AUI in it’s annual report highlighting it’s outperformance of the index. In fact AUI was the first LIC I ever owned purchasing it soon after that meeting. Those were the days.