The Australian Taxation Office (ATO) has begun asking SMSF trustees for additional supporting documentation as part of the new reporting rules for deferred contributions.
“What they’re asking for in terms of documents is proof the fund deed allows for the deferred allocation of member contributions,” Heffron SMSF Solutions technical services manager Leigh Mansell said.
“They’re looking for extracts of deeds and they’re looking for evidence demonstrating what trustees normally do when the SMSF receives a contribution.”
Mansell said in the normal course of events, contributions were allocated as soon as they were received, making the deferment of contributions at the end of the financial year an extraordinary act requiring an official minute.
“So they want a minute on file on the date of receipt where the trustees say they received a contribution, SIS (Superannuation Industry (Supervision) Regulations) allows them to defer it, the deed allows them to defer it, and as such the trustees have resolved to defer the allocation to a later date,” she said.
“Another minute is then required on 1 July, we do it on 1 July, reiterating both SIS and the trust deed allowed the trustees to defer allocating the contribution and they are now allocating the contribution.
“If the fund has claimed a tax deduction, the ATO is looking for the section 290/170 [Income Tax Assessment Act] notices and the acknowledgement, so don’t forget there are two limbs here, and they’re looking for the dates so be careful you’ve got the right dates on the documents,” she warned.
The new reporting rules apply specifically to contributions received by the SMSF just before 30 June, but not allocated to fund members until the following financial year.
Under the new ATO edict, SMSF trustees must now report any contribution as if it is allocated in the year of receipt, regardless of when the allocation to members is actually performed.
This amended reporting approach will potentially result in a larger number of contributions cap breaches against which SMSF trustees will have to object, and in doing so, produce a larger amount of documentation to justify their argument.