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  3. June 2019 Creates Super Contribution Allocation Trap

June 2019 Creates Super Contribution Allocation Trap

By Jason Splits
Posted on 15 June 2019 — 22:12pm in SMSF, Financial Advice

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Advisers and trustees have been warned to make contributions to their super funds well in advance of the end of the financial year, as a quirk of the 2019 calendar could mean they may be incorrectly allocated to the wrong financial year, and unable to be changed, an SMSF technical expert has said.

The word of caution came from Smarter SMSF chief executive, Aaron Dunn, as part of a webinar in which he reminded participants the end of the financial year would fall on a weekend this year and may cause delays with contributions being cleared by a bank and thus appropriately allocated to a fund.

“June 30 falls on a Sunday this year and what that means is you need to be very cognizant of the fact that if you don’t get money in on time, there is very little discretion for the amounts to be reallocated back to the previous year,”

Dunn said.

He pointed out any contributions banked on the last Friday of the current financial year – 28 June – may not clear until 1 July and would be considered by the ATO to be a contribution for the 2020 financial year.

Referencing the case of Liassic vs Commissioner of Taxation (2014), in which a super fund member had a concessional contribution allocated to their fund after the end of the financial year due to bookkeeping errors, he said

“the ATO commissioner has very little discretion to reallocate amounts not credited before the end of the financial year”.

“Plan accordingly to ensure the money comes in … and is banked promptly, so that it reflects on the member information for concessional contributions for this year,”

he warned.

Jason Splits is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine, and smstrusteenews website.

 

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