SMSF Contributions Reserving?

Hi Ivan, I posted an article by you earlier in the thread.

You might be able to clear up an issue discussed.

Does one have to be self-employed / employed to use the Contributions Reserving strategy?

From what I understand whether one is employed or not doesn't matter. As long as a Notice of intent to claim or vary a deduction for personal super contributions is correctly submitted and processed with acknowledgement of receipt by the fund etc then it's fine. That is the claimant could be self employed or no longer working assuming age restrictions etc.

Keen to hear your view.

Thanks in advance.

 

I would argue the other way on this one. How can an SMSF receive a contribution from an employer and not know how to allocate it? Employer contributions should be paid by a superstream compliant service which would identify who the contribution was made for so I don't believe an employer contribution could be reserved. Exception to this would be a related party employer.

Very tricky area and many pitfalls if the documentation isn't correct as stated. The process also used to be horrible with the ATO, but I believe has been streamlined a bit now where you can lodge a form with the ATO requesting an adjustment to concessional contributions to allocate them to the correct year.

 

Here is the latest ATO Request to adjust concessional contributions Form. It allows for PERSONAL and EMPLOYER contributions:

https://www.ato.gov.au/uploadedFiles/Content/SPR/downloads/SPR46558n74851.pdf

Instructions found here:
Request to adjust concessional contributions

And

10 things you need to know about contribution reserves

 

Gees @austing, I have a red face, my apologies was time poor, and didn't read in detail.

Yes, doesn't matter if you are self employed or not, its a strategy that can be used to minimise tax, however it is imperative that you or your tax agent send the request to the ATO otherwise you will have a massive surprise with you excess contributions tax. You can just send the form again, and a refund will be processed but this can be stressful and time consuming for the end customer. You know how great the ATO are with turnaround times

Cheers all

Ivan

 

Especially for this issue which is a manual process.....Two, three, five months.....

 

Although it's a different issue I was very happy with ATO turnaround time on an unusual situation we had with Personal CC involving the 10% rule because of deferred performance pay (after the wife had permanently retired two years previous) in F/Y 2015.

Was discussed back here:
Super Contributions and the 10% test

We suspected the Personal CC deduction may be auto-rejected by the system which it was. So a simple letter explaining the circumstances was sent. Based on my research and accountants view we were very confident of a good outcome. ATO agreed and refund processed. Turnaround 10 days in total.

 

Which is why it would be very silly for a SMSF trustee to try this without using an experienced SMSF professional which is what I'll be doing. Even then I will be watching carefully and asking questions based on everything I've learnt in discussing this thread.

Thanks to everyone who contributed and put up with all my questions.