Advisers must make sure the timing of a contribution is correct with regard to tax mitigation strategies involving an SMSF and capital gains tax (CGT) liabilities, an industry specialist has said.
Accurium head of tax education Lee-Ann Hayes issued the warning in light of an actual case she had experienced.
The advice was for the client to make a personal tax-deductible contribution to their super fund in the same year as settlement on the sale of an investment property was finalised, with the strategy being that the contribution would lessen the impact of the expected CGT liability arising from selling the real estate holding.
However, the process of the sale in question straddled 30 June, creating a compliance issue for the superannuant. Specifically, the contract for sale was completed before 30 June, but settlement occurred in the subsequent income year.
“CGT contract date is the date when the CGT event is considered to have happened. I know technically the CGT event doesn’t happen until settlement, but the legislation says the taxing point is determined by the contract,” Hayes told attendees of SMSF Professionals Day 2025 co-hosted by selfmanagedsuper and Accurium in Melbourne yesterday.
“If that’s in an earlier year, then the contribution needs to be made in order to get the deduction in order to reduce the individual’s income.”
She emphasised the gravity of the error and why it should serve as a cautionary tale for advisers.
“So even though you might be an adviser, you can’t just disregard the CGT element. This was a case where the Financial Services and Credit Panel actually issued an official written warning to the adviser because they just didn’t give the full picture to the client with respect to CGT,” she noted.
“So advisers do need to understand the CGT side of things even if it’s to tell the client to get more specialist advice because you can’t give them the full picture.”
