Contributions, SMSF, Tax

Post-death contribution deductibility confirmed

Personal contribution Tax deductibility ATO TR 2010/1 SMSF

Legal representatives of a deceased SMSF trustee can claim a tax deduction for contributions made by the member before their death.

Personal superannuation contributions made to a fund before the death of an SMSF member may still qualify for a tax deduction after the event if certain criteria are met, according to a technical specialist.

While BT technical consultant Matt Manning noted this situation is rare, BT’s technical services team has received questions regarding the tax deductibility of contributions in these circumstances through its support hotline.

“Let’s consider if someone makes a personal contribution to super and then very soon after passes away in the same financial year. When completing the client’s final tax return, can the executor submit a section 290-170 notice and claim the deduction for a personal contribution? The good news is the answer is basically yes,” Manning told attendees of a BT Financial Group webinar today.

He added ATO Taxation Ruling 2010/1 confirmed this to be the case, allowing a legal representative to lodge a notice of intent to claim a deduction on behalf of the deceased member provided certain criteria are met and it is lodged before the final tax return.

“The executor has the authority. They would usually delegate their authority to the accountant, but as with anything, the executor has always got the responsibility even if they delegate their authority to basically step into the deceased’s shoes and claim that as a tax deduction to be used to offset their income from their final tax return,” he said.

“Usual rules apply as far as the funds still holding the contribution and the contribution being on time and we have to do this before the death benefit gets paid because after that it’s going to be too late, the money’s not there anymore.”

However, he clarified the ruling did not give legal representatives the ability to make contributions for the deceased fund member as this would typically constitute a contravention of the Superannuation Industry (Supervision) Act 1993.

“None of this relates to making a separate contribution. So after the person has passed away, we can’t make a contribution on behalf of this deceased person. This is just if they make the contribution and then pass away, the submission of the notice can be done after death,” he said.

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