Compulsory employer contributions made in arrears under the super guarantee (SG) amnesty measure do not necessarily have to impact on an individual’s concessional cap for the current year, a technical manager has said.
The SG amnesty ended on 7 September and may result in make-up payments being received in the current financial year that would see them allocated against a person’s concessional contributions cap for 2020/21, SuperConcepts SMSF specialist Anthony Cullen noted.
However, Cullen alerted advisers to certain actions available to SMSF members that will allow them to avoid this predicament.
“Generally under these circumstances, and we’ve actually seen this with clients, is that if you are going to go over a cap for a reason beyond your own control, such as an employer making these [SG amnesty] contributions, you can as an individual write to the ATO and either ask them to disregard a contribution or reallocate it to a different year,” he told attendees of the SMSF Professionals Day Digital 2020, co-hosted by selfmanagesuper and SuperConcepts this week.
According to Cullen, the above course of action applies to instances where the employer pays the contributions in arrears to the super fund directly, but he pointed out there are also certain situations where the regulator itself may choose to make a ruling on these payments without correspondence from the superannuant.
“There are [also] rules within the SG amnesty [measure] that if an SG amnesty amount has been paid to the ATO, and the ATO then makes that contribution to a superannuation fund, the commissioner can actually produce a determination to reallocate [the contribution] to another year or disregard that amount without the member actually triggering that requirement,” he noted.
“I’m bringing this up because if you do have clients who have received amnesty amounts, you might want to look at whether the commissioner has reallocated them to a different year or whether it’s worth applying to have them reallocated to a different year.
“That might then free up some space for your clients to make further concessional contributions within this year’s cap.”
With regard to high-income earners subject to the division 293 provision, he stipulated any SG amnesty amounts will not be counted towards the low tax contribution on which additional tax has to be paid.
