ATO de minimis rule can cause confusion

A sector specialist has warned practitioners the ATO has the ability to apply a de minimis rule for small breaches of the concessional contributions cap, potentially creating confusion for SMSF members, but suggested there is a solution at hand to address this issue.

Heffron SMSF technical and education services director Leigh Mansell illustrated her point using an actual situation where total employer contributions had breached the member’s concessional contributions cap by 23 cents and the ATO did not issue an excess concessional contributions determination.

Subsequently, the member in question made further contributions that resulted in a breach of their non-concessional cap due to the 23-cent concessional cap excess. Subsequently, they were issued with an excess non-concessional contributions determination.

Mansell acknowledged the application of a de minimis rule in this context is not transparent, meaning practitioners and their clients cannot anticipate the outcomes stemming from it.

“This isn’t a normal scenario. I think this might be one of the cases where a de minimis rule is applied behind the scenes by the ATO. [Unfortunately], we don’t know how the de minimis applies. We don’t know what the ATO’s machinations are [with this],” she told delegates at the SMSF Technical Summit 2026 hosted in Sydney last week.

“It might be thinking 23 cents is too small [an amount] to issue an excess concessional contributions determination and because it doesn’t issue that, [trustees are not afforded] the ability to elect to release [that amount].”

If faced with these circumstances, she said practitioners and their client need to discover the original problem that led to the predicament they are in and not automatically apply for ATO discretion to deal with the matter as this would commit them to a long and drawn out process that might be unsuccessful.

“You could instead speak to the ATO. So if you’ve got an ATO contact person, have a conversation with them and take a reference number down,” she explained.

“One of the things you could be talking to them about, and this is what the accountant [in this situation] did, [is ask] if an excess concessional contributions determination was ever issued.

“In this example, one was never issued and it’s possibly because [the amount in question] was only 23 cents so that would be where the ATO de minimis rule pops in.

“So [it was confirmed the determination] was never issued in the first place so [the ATO] issued it [after the conversation]. That opened up the 60-day window for [the member] to elect to release her excess 23 cents that fixed up her non-concessional contributions problem.”