A problematic situation has arisen for some SMSFs from cases where contributions made in arrears under the super guarantee (SG) amnesty are being allocated to funds that cannot accept them, a technical manager has said.
SuperConcepts SMSF technical and private wealth executive manager Graeme Colley revealed the circumstances have come about when employers have made SG catch-up contributions to the ATO and the regulator has then attempted to redirect the payments to an SMSF.
“[The problem arises] where one of the trustees of the superannuation fund, [being] a single-member fund, is not a member of that fund,” Colley told attendees at the Self-managed Independent Superannuation Funds Association SMSF Virtual Forum 2020 today.
“So the ATO is causing a few issues around that because if the individual is just a trustee of the superannuation fund and not recognised as a member, the fund can’t accept those contributions.
“So some of these [situations] with the transfer of money, because of lost money and various things and the inactive member balances from some superannuation funds are wanting to be transferred to self-managed super funds, may be an issue where you’ve got an individual being a trustee of the fund and not being a member of the superannuation fund.
“It’s certainly something you need to be aware of as an administrator of the fund and how that might impact.”
During his presentation, Colley also flagged an issue SuperConcepts is witnessing regarding rent relief granted to a related party under the COVID-19 financial hardship measures.
“One [problem] we’ve found with this initially was not necessarily with the rent relief, but the fact that the [SMSF] and the related parties had not complied with the initial lease agreement,” he noted.
These situations have arisen when indexation changes to the rent charged have not been implemented over a number of preceding years, he said.
“[So in these circumstances] how [is the related party] going to compensate the superannuation fund because that falls outside the rent relief arrangements.”
According to Colley, some SMSF trustees have tried to argue with the auditor these amounts should be treated as rent waivers, but without much success.