A senior SMSF executive has warned practitioners less-standard contribution strategies not constrained by an individual’s total super balance must still be considered with regard to potential Division 296 tax implications.
“Where we’ve got people looking to use the small business CGT (capital gains tax) [provisions] or people looking to [make] downsizer contributions, because they are not measured against the total superannuation balance, [these strategies will still] potentially put [these] people within scope of Division 296 in the singular sense,” Smarter SMSF technical and education manager Tim Miller told attendees of a webinar for industry professionals held yesterday.
“So [that’s as] a single member versus a recipient of a death benefit income stream or a reversionary pension.
“So be mindful of that.”
Aside from the Division 296 implications of these less-standard contribution strategies, Miller also stressed not to ignore the adverse compliance consequences of these strategies should they be executed incorrectly as they are potentially more severe than those pertaining to more conventional actions such as making non-concessional contributions.
“[For example], if you get your small business CGT election wrong from a timing point of view, that’s probably far more catastrophic [from a contributions perspective] than exceeding the non-concessional cap by accidentally triggering the bring-forward [provisions] early or whatever it might be,” he noted.
“That’s because these [types] of contributions are much larger in their scope and scale and so [associated breaches] are going to result in more significant excess non-concessional contributions.”
He also took the opportunity to remind advisers and accountants every single contribution strategy has some form of condition attached to it.
“So whether we’re looking at recontribution strategies or looking at bring-forward [non-concessional contributions], again we’re having to look at the total superannuation balance for the member and we’re having to look at age,” he said.
“For personal deductible contributions [we have to confirm there is] no issue there with regard to claiming it based on income. [To this end, we have to know if the member] is 67 or are they between [age] 67 and 75 and therefore have to satisfy the work test.”
Contribution strategies will be discussed in more detail at the SMSF Professionals Day 2026. Click here to find out more and register.
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
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