To avoid unintentionally triggering the three-year bring-forward rule for non-concessional contributions, superannuants should only make personal concessional contributions in whole dollars, according to an SMSF specialist.
SMSF Alliance practice principal David Busoli said super fund members making contributions needed to be aware of the impact a handful of change could make to a contribution strategy where a member was close to reaching a cap.
Busoli cited a recent case where, in the 2024 year, a member received employer contributions of $6,576.64 and made personal deductible contributions of $20,923.36, for a total concessional contribution of $27,500.
The member also made a non-concessional contribution of $110,000 with a view to using the three-year bring-forward rule in the following year.
“This would have been fine if the $27,500 concessional contribution had been sourced exclusively from employer contributions or personal concessional contributions, but the combination has caused an issue as it involved cents,” Busoli said.
This is because the ATO will only process personal concessional contributions in whole dollars. If there are cents in the amount, it will be truncated to the dollar figure. In this case, the personal deduction became $20,923, reducing the total allowable deduction to marginally below the $27,500 allowable cap.
“This wouldn’t have been such a big deal if that’s all that happened, but it wasn’t. The ATO website states that a deduction can only be claimed in whole dollars and if you make a personal contribution in dollars and cents, ‘the residual cents will remain a non-concessional contribution and will count towards the relevant cap’,” Busoli said.
This meant the remaining 36 cents were considered a non-concessional contribution and unintentionally triggered the member’s three-year bring-forward strategy as they were regarded as having made a non-concessional contribution of $110,000.36 in 2024.
“We have extensively researched this ridiculous situation and don’t believe there is a solution,” Busoli said.
