Accountants are going to have to make greater use of superannuation balance (TSB) data held by the ATO if they plan to help clients benefit from the catch-up contributions that are available to them from this financial year onwards.
Speaking at the Institute of Public Accountants National Congress in Adelaide last week, BDO superannuation partner Shirley Schaefer said accountants working with SMSFs will need to keep an eye on the TSB of SMSF members to ensure they are eligible for the measure.
Schaefer said the 2020 financial year was the first in which superannuation fund members could use the catch-up provisions to contribute any part of a previous year’s $25,000 concessional contribution that was not already contributed into their fund.
“The fund member must have a TSB of less than $500,000 at the immediate prior 30 June and the problem with SMSFs is we don’t know what the TSB numbers are because we don’t know what member balances are early in the year,” she said.
“This will put more pressure on us to get superannuation work done earlier so people know what their fund balances and their TSB are and if they can make catch-up contributions.
“The good news is the ATO has this information and in its portal you can see a client’s TSB, but that data is only as good as the information the ATO has received.
“For large funds which report regularly it should be up to date, but for SMSFs it depends on when it has last reported, however, if you are working on the SMSF, you will be aware of that already.”
She pointed out that while the 2020 financial year was the first year in which the catch-up contributions could be used, and the provisions allowed for contributions to be considered from the five previous financial years, the 2019 financial year was the first year from which catch-up provisions would apply.
Over time it would be possible to move up to $175,000 into superannuation as a concessional contribution, but this was dependent on stability around the regulations, she added.
“It will require five years of catch-up contributions at $25,000 per year, the same amount in the current financial year and the use of a reserving strategy to make a June contribution push into the next financial year,” she noted.
“It does require all the planets to be aligned with the client having the ability to make the contributions, having not done so for the previous six years, and no more changes to the superannuation rules.”