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Personal concessional contribution misunderstanding
Each year, there are a few instances where an SMSF member is informed by their personal tax accountant that they can’t lodge their personal return until the ATO is informed of the personal deductible contributions they've made to their SMSF.
We have even had one recently where we were told the SMSF return had to be relodged as it must not have advised the ATO correctly. In both cases, they are wrong.
If a member makes a personal contribution, it is non-concessional by default. It only becomes concessional when the superannuation fund receives a valid S.290-170 notice and responds accordingly. It is this response that the member must show to their personal accountant to enable the deduction to be taken.
This is the same for both APRA funds and SMSFs. There is a difference in reporting though. APRA funds report personal deductible contributions to the ATO within 10 days of being provided with a valid S.290-170 notice. These are promptly reflected in MyGov.
Not only are SMSFs not required to report, they are physically unable to do so as there is no ATO protocol that allows them to. For SMSFs, the ATO relies on the member’s personal tax return to determine if they have made a personal deductible contribution to their SMSF.
The problem is that some personal tax accountants have become too used to using a regular short cut to determine a member's concessional contribution status. They simply look it up on MyGov. That's fine provided the member isn't contributing to an SMSF. I wonder how many deductible contributions are missed due to this.
If the SMSF has received a valid S.290-170 notice, contributions tax will be levied on the member’s personal contributions irrespective of whether their accountant takes the deduction or not. If not, the member’s SMSF account will have been taxed without the member receiving the benefit of the personal deduction – not the best scenario.
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