SMSF members must ensure the proper administration procedural timing is satisfied when looking to use the small business capital gains tax (CGT) concessions as failure to do so will completely undermine the strategy, a sector specialist has warned.
“Importantly, no later than when the contribution is accepted by the trustees and made to the fund, and those two [events] must be the same, we must provide the relevant form – the capital gains tax election form,” Accurium head of SMSF education Mark Ellem told attendees of a technical webinar held yesterday.
“I have seen it where [this form] has been provided a day late [or] a week late. That’s too late. So it’s also important, particularly where the contribution is made to an SMSF, that not only is the form completed, it is signed and [dated] not later than the date the contribution shows up in the fund’s bank account.”
Further, Ellem took the opportunity to remind practitioners of the completely separate contributions cap applying to monies directed towards an SMSF under the small business CGT concession rules.
“With our small business CGT that gives us eligibility for a separate [contributions] cap – a cap other than the concessional cap and the non-concessional cap,” he noted.
According to Ellem, it means members will not be subject to some of the other contributions restrictions incorporated in the retirement savings system.
“Of course, while the concessional cap is not subject to the individual’s prior total super balance, the non-concessional contributions cap is. But if we can apply the separate CGT cap amount, that is not subject to the [person’s] prior total super balance,” he said.
He confirmed the contributions cap relating to the small business CGT concessions is indexed and stands at $1.78 million for the 2025 income year and $1.705 million for 2024 financial year.
