Deductions for superannuation contributions made by a fund member before their death can be made by representatives of their estate, but any claims must be valid and require checking against the fund, a technical expert has stated.
Heffron senior SMSF specialist Annie Dawson said making a claim for a tax deduction on contributions for a deceased member is dependent on who is allowed to lodge the Income Tax Assessment Act (ITAA) 1997 section 290-170 notice of intent to claim a deduction on behalf of that member.
“Fortunately, we have some real clear answers from the ATO on this, in paragraph 68 of Taxation Ruling 2020/1, which clarifies that the section 290-170 notice can certainly be signed by the executor of the deceased member,” Dawson said during a recent technical clinic.
“You will want to make sure that the notice is going to be valid and one of the aspects of that is checking that the fund still holds the contributions that the notice relates to.
“For example, if the trustee of the fund has already commenced to cash a death benefit from the accumulation account where the contributions were made, then when a benefit is paid, a portion of those non-concessional contributions the member made will be deemed to go out with that benefit payment.
“Even if their residual balance is more than the non-concessional contributions that were made that would be irrelevant.
“You will just need to arrange to only claim a proportion of the tax deduction based on the contributions that are still held, but otherwise you can have the confidence that the executor is permitted to make that notice.”
Section 290-170 of the ITAA 1997 also requires an executor to submit the notice of intent to claim a deduction for contributions made by the deceased member before the member’s income tax return is lodged, or by the end of the next income year, and the trustee must acknowledge this notice.
