ATO, Compliance, Contributions, SMSF

Deduction notice reminder issued

ATO SMSF Contribution deductions Notice of intent

The ATO has reminded SMSF members they cannot claim a deduction for personal contributions without informing their fund, which must acknowledge the course of action.

The ATO has reminded SMSF members that making a deduction for personal super contributions will fail if they have not lodged a notice of intent with their fund and received an acknowledgement in return.

In an update on its website, the regulator stated the timing of the lodgement of the notice and acknowledgement by the fund was important as any actions that came before the latter could place proceeding events in jeopardy.

“Once [a notice is] received, a fund trustee must send a written acknowledgment confirming they have received a valid notice of intent to claim a deduction,” it said.

“Members must receive the acknowledgment from their fund before they can claim the deduction on their tax return.

“SMSF members considering rolling over or withdrawing their super should ensure they have an acknowledged notice of intent for any deduction before they initiate a rollover or close their account.

“If a member gives their fund a notice of intent after they have rolled over their super interest to another fund (that is, closed their account) or withdrawn their super interest (paid it out of super as a lump sum), the notice won’t be valid.

“This means the member will not be able to claim a deduction for the contributions they made before the rollover or withdrawal.”

In a related update from last week, the ATO stated a single notice of intent can cover all personal super contributions made during the year that will count towards the concessional contributions cap and SMSF members should be aware of the effects on other superannuation thresholds.

“You should consider the possible impacts, including whether you will exceed your concessional contributions cap, [whether] you will have to pay Division 293 tax, [if] you wish to split your contributions with your spouse and [if] it will affect your super co-contribution eligibility,” it said.

It also flagged that small amounts not claimed as a deduction may breach contribution caps.

“A deduction can only be claimed in whole dollars. If you made a personal contribution in dollars and cents, the residual cents will remain a non-concessional contribution and will count towards the relevant cap,” it said.

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