The ATO has flagged the transitional rules for non-concessional contribution (NCC) bring-forward amounts as an expected pain point as SMSF advisers continue to work out in which financial year the rule was triggered in line with their clients’ total super balance.
At the recent SMSF Association Technical Day in Sydney, ATO assistant commissioner Alex Affleck revealed there have already been cases around the complexities in accurately calculating and checking SMSF clients’ circumstances.
“This is an area where we have some concerns over whether this transitional rule will trip people up,” Affleck said.
“We’re hoping that it won’t, but I think there is some risk here with the transitional rules that were put in concerning the NCC cap and the changes … it’s not an easy concept for people to get their heads around, so we do see it as a risk that individuals may get it wrong.
“With the bring-forward rule, there have been cases where people have been getting the rule wrong, which can have quite serious consequences and so we do see it as an issue and I wanted to stress that point.
“We acknowledge, as well, that as busy as it has been for us in the tax office, we certainly appreciate just the scope of changes that [affect] practitioners and we’d like to work with practitioners certainly over the next year but on an ongoing basis to help practitioners, as well as trustees of SMSFs, to come to grips with the changes.”
The 2016 federal budget changed NCCs to $100,000 a year if the super balance is less than $1.6 million, flowing into a three-year bring-forward of $300,000.
The old $540,000 three-year bring-forward rule for NCCs was in place until 30 June.
Transitional rules apply for any bring-forward contributions triggered before 1 July, meaning the eligibility to contribute bring-forward NCCs must now be determined on a yearly basis as it must be calculated against the member’s total super balance, that is, if it is nearing the $1.6 million cap.
