SMSF members who are still making personal contributions into their fund will lose any tax deductions they could claim if they are also drawing down a pension and fail to pay the minimum amount required during the same financial year, a technical specialist has warned.
Heffron head of education and content Lyn Formica said problems arise in how a pension is viewed when it fails to make minimum payments and gave the example of Geoff, whose fund failed to pay the required amount for 2024/25.
“Geoff’s minimum was $50,000 and his fund only paid him $20,000 in March 2025. At the same time, he has an accumulation account and contributed $30,000 to it in November 2024 as he was planning to claim a tax deduction for it when he submits his tax return in October 2025,” Formica told Heffron Super Intensive Day 2025 attendees in Sydney yesterday.
“This plan sounds fine, but because we failed to pay the minimum, the [accumulation and pension] interests are combined.
“The rules state if I have taken a $20,000 lump sum from an accumulation account, I have taken it from the same super interest I put my contribution into.
“Geoff is going to miss out on a full tax deduction for that contribution because we’ve taken a lump sum before we gave our notice of intent [to claim a deduction].
“He needed to have given the notice on the day he put the contribution in, or before that lump sum came out, but did not know it was a lump sum until after his fund failed to pay the minimum.
“This is another problematic area [with pensions] so if your client is confident they’re going to claim a tax deduction for all of the contribution, get them to give their notice to the fund on the day they put the contribution in, just in case things happen.”
