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A recent Australian Tax Office (ATO) interpretative decision has
confirmed that a member can make a contribution to a self-managed
super fund (SMSF) prior to 30 June 2012, claim the deduction for
the 2012 financial year, and the trustee of the SMSF can allocate
the contribution to the member in July 2012 so that it counts
toward the contribution caps in the 2012/13 financial year.
In ATO ID 2012/16, a member of an SMSF made a personal
contribution of $25,000 on 4 April 2011 and a subsequent
contribution of $25,000 on 28 June 2011. The trust deed allowed the
trustees to credit the 28 June contribution to a reserve account
and allocate the contribution to the member in the following
financial year.
The ATO agreed with the trustees' actions and allowed it to
be counted as a concessional contribution in the financial year of
allocation rather than the year of receipt. This meant that the
member was allowed a deduction of $50,000 in his income tax
assessment for the 2010/11 financial year even though the
member's concessional contributions cap for that year was
$25,000.
There are specific rules that trustees should be aware of if
they allocate contributions on this basis. For example, the trustee
must allocate the contribution to a member of the fund:
within 28 days after the end of the month; or
if not reasonably practicable to allocate within that time,
such a longer period as is reasonable.
This can be an effective way of managing contributions but can
only be done if the trust deed of the fund allows for it.
Advisers and members of SMSFs contemplating this must review
their trust deeds to take advantage of this strategy and update
where necessary.
If you would like to discuss any issues relating to the
information in this alert, please contact a member of our
commercial team on 07 3231 2444.
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