Remind clients of deduction timing

personal superannuation contributions tax deduction notice of intent to claim

SMSF advisers should not leave the work of reminding clients about when to claim a contribution tax deduction to a tax agent given they were involved in creating the strategy.

SMSF advisers should remind clients regarding the timing of claims for a deduction for personal superannuation contributions rather than leaving that to their tax agent, given the adviser was likely to be closely involved with the contribution strategy, according to a technical expert.

Heffron head of education and content Lyn Formica said the SMSF administration firm was seeing more cases where clients who intended to claim a tax deduction for personal superannuation contributions did not have their intent to claim notice acknowledged by the trustee of their fund.

Speaking during an online technical update today, Formica said there were two parts to claiming a deduction and members may be getting the timing of those wrong, causing the problems with the deduction claim.

“The member has to give notice to the trustee saying they intend to claim a tax deduction and then the trustee has to acknowledge receipt of that notice,” Formica said.

“If we have got situations where the notice simply isn’t valid, there can be many reasons for that.

“A common reason which invalidates a notice is because by the time the notice was given the member is no longer a member of the fund that received those contributions as they have already transferred their benefits to somewhere else.

“Perhaps the trustee no longer holds all or part of that contribution because they have paid a lump sum or the individual started to commence a pension on the basis of all or part of those contributions.

“If the notice hasn’t been given to the funds by the time those events happen, then a notice given after those events is going to be invalid.”

She noted SMSF advisers had a role to play in managing this timing because they would be aware of the underlying contribution strategy.

“You might be thinking the timing of the notice of intent is the accountant’s or tax agent’s responsibility as the individual needs to look after those sorts of bits and pieces,” she said.

“Yet there are situations we’ve attended to where we have recommended a contribution, we have recommended a rollover or a lump sum withdrawal or a pension start-up.

“So we do need to be cognisant of alerting people to the timing of when they need to get their notices in because otherwise their contribution strategy is just not going to be effective.”

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital