An SMSF sector expert has warned compliance breaches may result from confusion over the contribution rules changes included in the 2019 federal budget.
The measures contained in the federal budget handed down last week may lead to compliance confusion among SMSF trustees due to their similarity to other measures already passed into law, an SMSF technician has warned.
With reference to the measure scrapping the work test rule for individuals aged 66 and 67, Miller Super Solutions founder Tim Miller identified problems stemming from the work test amendment announced in the 2018 budget.
“Because of the other work test rule change that has been passed and is in effect from 1 July 2019, the announcement in this year’s budget may create confusion as one is linked to your last year of employment, whereas this year’s is effectively just an age-driven amendment,” Miller told smstrusteenews.
The move to allow people aged 66 and 67 to have access to the non-concessional contribution bring-forward rules also has the potential to create compliance issues, he added.
“I had someone that found out last week there was no $500,000 lifetime limit for non-concessional contributions, so I think the problem with an announcement like that is it will inevitably lead to errors being made this year,” he forecast.
“So these measures could potentially create excess contribution issues or refunding contribution issues for those people over 65 because people won’t understand it.”
According to Miller, the nature and timing of this year’s budget measures are key details advisers and their SMSF clients need to keep in mind to avoid compliance errors occurring.
“As long as people are aware that it’s purely an announcement and that it’s an announcement that starts from 2020, they should be okay,” he noted.''