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Contributions Procedures to be Streamlined

Darin Tyson-Chan from smsmagazine writes: The method SMSF trustees and members must follow to be able to claim a tax deduction for contributions is to be monitored and likely fine-tuned in the foreseeable future.

Currently superannuants are required to provide notice to the super fund trustees declaring their intention of claiming a tax deduction for certain personal contributions they have made. In turn, the superannuation trustees must issue a written acknowledgement of the member’s intention to claim a deduction for personal contributions before the member can actually include the deduction against their assessable income. “What we’ve heard from Treasury is that, at a future date, they will review that process of giving the notice and receiving the acknowledgement to see if they can make that process a little bit simpler,” SuperConcepts technical services executive manager Mark Ellem said. Ellem added Treasury had recognised the importance surrounding the timing of those documents and how easy it was currently for fund members to make an error. “If you’re looking after self-managed super funds, you need to ensure that those notices are prepared appropriately and of course are dated appropriately because there can be some issues with these notice that make them invalid,” he said. He highlighted how important it was to get the timing of the documents right using a scenario where an individual had made personal contributions to their SMSF and started a pension halfway through the year that included those personal contributions. “If subsequently to starting the pension the person sends a notice to the trustees of the fund saying ‘I’m claiming those contributions as a tax deduction’, the trustees would write back and say ‘sorry, we can’t acknowledge that’,” he said. “That notice would be invalid because the contributions had already been used to make a benefit payment being the pension. “The notice had to have been given no later than when the pension commenced.” Treasury was looking at amending that procedure to minimise the chances of people falling into traps like the one illustrated above, particularly as it was anticipated more individuals would be claiming deductions for personal contributions now the 10 per cent rule had been scrapped, he noted.

To answer any questions you may have regarding Self Managed Superannuation, contact Savvy Super Advisers to discuss. Savvy Super Advisers Pty Ltd is a Corporate Authorised Representative of Politis Investment Strategies

#SMSF #super #superannuation #treasury #contributions #finance #future #pension

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