SMSF trustees and advisers should remember all contributions will be treated as non-concessional until such time as the fund is told otherwise, placing the onus on members to provide relevant contribution notices when required.
Heffron head of education and content Lyn Formica said it was important for advisers and trustees to be aware of how those notices work as some had strict requirements and any failure would see a contribution treated as being non-concessional.
“There are issues with contribution notices when we have to inform the trustee of the fund that we have made a particular contribution and we also have to have that reported to the ATO in a particular way for our strategies to work,” Formica said at the Heffron Superannuation Intensive Day in Sydney yesterday.
“By default, a contribution from a member is always a non-concessional contribution and it counts towards the member’s non-concessional contribution cap, unless they do something different to change that.”
She noted a downsizer contribution that met the eligibility rules would only move from being non-concessional to a downsizer contribution if the trustee was provided with a particular notice on or before the day it was made.
The same applied for moving a non-concessional contribution to a concessional one through the use of a notice of intent under section 291.70 of the Income Tax Assessment Act 1997, which also required the trustee to acknowledge receipt of that form.
“With downsizer we’re just giving a form to the trustee of the fund on or before the date the contribution is made,” Formica said.
“When we’re looking at concessional contributions, after giving the form if we don’t receive acknowledgement of the notice, it’s not tax deductible and it doesn’t move from being a non-concessional contribution.”
Where fund members fail to have a contribution treated concessionally, it is usually because they have not acted within the strict timeframes for using a section 291.70 notice to claim a tax deduction and there was little recourse to be sought from the ATO, she said.
“This is not one of those situations where the ATO is playing hardball. It’s one of those pieces of legislation that’s quite strict and members have to give notice by those timeframes or the deduction is just not available,” she said.
“So it’s really imperative that we’re mindful of the dates on our notices and when we’re giving those notices to our trustees and our superannuation funds.”
