SMSF members looking to make downsizer contributions into their fund will need to show proof to an auditor they and the fund are eligible and able to take that action, an SMSF legal expert has advised.
SuperCentral self-managed superannuation executive consultant Michael Hallinan said there were a number of proofs SMSF members would need to provide to satisfy an auditor and the ATO, and highlighted the need for the trust deed of an SMSF to allow the trustee of the fund to accept downsizer contributions.
“Most trust deeds of a super fund will have a provision dealing with contributions which can be made to the super fund. Sometimes the provision can be quite general in nature – covering all types of contributions – or amount to a shopping list of specific types of contributions which can be made or both,” Hallinan said.
“If the trust deed contains a general contribution provision, then downsizer contributions must be covered by the general provision. If there is a shopping list of specific types of contributions, then downsizer contributions must be on that list.”
The auditor also will need proof that the ATO downsizer contributions form (NAT 75073) has been signed and dated by the member who will be the beneficiary of the contribution and received by the SMSF trustee before or at the same time as the contribution is made.
“If the form is received by the trustee of the SMSF after the downsizer contribution is made, then the contribution will not qualify as a downsizer contribution, but be treated as a personal contribution,” he said.
He said while the ATO has not explicitly stated specialist written advice should be provided to the trustee of an SMSF, where it is provided it should confirm all applicable requirements have been met.
These would include proof the member or the beneficiary of the contribution has provided a tax file number to the SMSF, they had reached age 65 at the time the contribution was made, the contribution had been sourced from the sale proceeds of a qualifying Australian dwelling and made within 90 days of settlement of the sale, and no previous downsizer contributions had been made in the current or past financial year.
“This written advice can be incorporated into the trustee resolution accepting the contribution and, so, form part of the trustee record for the transaction,” Hallinan said.