Correctly report SMSF personal contributions

It is imperative that the correct reporting procedures are followed when reporting personal contributions made to a self managed superannuation fund (SMSF).

Regardless of the member’s intentions, it is important that such contributions are reported as “personal/member contributions” in the member’s statement section of the fund’s income tax return. This will avoid members being assessed by the ATO and having to pay excess contributions tax.

Following a basic procedure such as the one detailed below will mitigate the risk of being assessed incorrectly:

Member notification 

Each member must notify the trustee of the SMSF of their intention to claim a superannuation deduction in their personal tax return by the first date of either:

• The day the taxpayer lodges their personal income tax return for the income year in which the contribution was made OR
• By the end of the subsequent income year in  which the contribution was made.

A member cannot revoke or withdraw a valid notice of intent but may vary the notice so as to reduce the amount stated in relation to the contribution (including to nil) so long as it is within the timeframes set out above.

AND

Notification is required in an approved form otherwise an income tax deduction may later be denied. The ATO has provided the proper form under NAT 71121.

If a deduction claimed by the taxpayer is denied by the ATO for any reason, a member may vary the notice to reduce the claim including to nil at any time regardless if it is outside the timeframe as listed above.

Trusteee Acknowledgement

The trustee is required to acknowledge receipt of the notice using the following procedure as recommended by the ATO:

1. Issue a statement acknowledging the receipt of the member’s notice of intention to claim a deduction
2. Using the earlier date of either:
   - The original notice was received by your fund OR
   - Any subsequent variations were received by your fund
3. Update the member account and fund details to record the contribution as a personal.

By following the above process, members will claim the deductions they are entitled to, Trustees will administer the SMSF correctly and any potential excess tax and penalties will be avoided.

For more information on SMSF reporting contact our wealth experts