SMSF members making contributions to their fund that are not transferred by electronic means or cash will find the dating of that payment may alter its treatment and should factor in further time where necessary or change their processes.
BT technical consultant Tim Howard said contributions made as cash or via electronic funds transfer would be recognised as such when received by an SMSF or credited to its account, but payments made by cheque are still dependent on the date it was written, as well as when it was banked by the trustee.
“If an SMSF trustee receives a personal cheque from a member on 27 June and that is banked by the trustee in the SMSF bank account in the first week of July, in which financial year will the contribution be attributable to the member? Is it going to be a when the fund received the cheque or the trustee got around to banking it?” Howard asked during an online adviser briefing today.
“The answer is when the trustee receives the cheque. So long as it is banked promptly, then the contribution will be accepted when the cheque was received.
“So a cheque that’s banked in the first week of July, but received on 27 June, I would accept that as being promptly banked and the contribution made in the 2024/25 financial year. That is not just my opinion, but comes from Taxation Ruling 2010/1.”
He further emphasised the role of dates on payments and prompt actions of trustees where an SMSF receives a cheque that is post-dated.
“In this case, the SMSF trustee receives a cheque from a member on 27 June, but it is signed and dated as 2 July as money won’t be in the member’s account until then,” he said.
“The cheque is banked by the trustee in the SMSF bank account in the second week of July, so promptly after receipt, but in which financial year will the contribution be attributable to the member?
“Since the cheque was dated into the new financial year, it is not the date the trustee received it but the actual date on the cheque, as long as it is promptly banked, which is when the contribution is made.”
He added that cheques were being phased out by some financial institutions and this may be a further reason for trustees to consider more modern payment methods.
“I’m not sure if they have been phased out yet. If they are, we no longer need to worry about submitting cheques. If they are being phased out, then SMSF trustees need to be a bit more prudent around making their electronic fund transfers on time, rather than writing a cheque to themselves.”
