Timing of contributions is important, especially if you are managing your contributions cap.
When is a contribution made to a super fund? Contribution will be made when the funds are received by the self managed super fund. It is generally recorded on a 'cash' basis. Accruals method is not acceptable.
If you are planning to make a contribution on or before 30 June that is to be counted in that year's cap, it must be 'received' by the SMSF on or befor 30 June. If contributing by electronic transfer of funds, it must be credited and showing on the SMSF's bank account on or before 30 June. When the transfer of funds occurred is not relevant.
The Australian Taxation Office's position is as follows:
| If the funds are transferred by... | A contribution is made when... |
| Making a cash payment to the SMSF | The cash is received by the trustee for the SMSF. |
| An electronic transfer of funds to the SMSF | The funds are credited to the SMSF's account. |
| Giving the superannuation provider a money order or bank cheque on which payment is made | The money order or bank cheque is received by the trustee of the SMSF, unless the order or cheque is dishonoured. |
| Giving the trustee of the SMSF a personal cheque (other than one that is post-dated) that is presented and honoured with cash or its electronic equivalent. | The personal cheque is received by the trrustee of the SMSF, so long as the cheque is promptly presented and is honoured. |
| Giving the trustee of the SMSF a personal cheque that is post-dated and that is presented and honoured with cash or its electronic equivalent | The cheque is able to be presented for the payment (the date on the cheque), so long as the cheque is promptly presented and is honoured. |
| A related party (as maker) issuing a promissory note, payable on demand at face value, to the trustee of the SMSF and the note is paid with cash or its electronic equivalent | The promissory note is received, so long as payment is demanded promptly and the note is honoured. |
| A related party (as maker) issuing a promissory note, payable on a future date at face value, to the trustee of the SMSF and the note is paid with cash or its electronic equivalent | The promissory note is received, so long as payment is demanded promptly and the note is honoured. |
Personal cheque or related party promissory note will be taken to have been demanded promptly if payment is demanded within a few business days.
Contribution by transferring asset (in-specie contribution)
A contribution by way of a transfer of an asset will be made when the SMSF obtains ownership of the asset from the contributor. The SMSF obtains ownership of an asset when beneficial ownership of the asset is acquired. Beneficial ownership can be acquired earlier than legal ownership.
Where there is no formal registration process that evidences ownership, the ownership of asset will often pass when the SMSF acquires physical possession of the asset.
Example - real property
A SMSF acquires the beneficial ownership of real property when the SMSF obtains possession of a properly executed transfer that is in registrable form together with any title deeds and other documents necessary to procure registration of the trustee of the SMSF as the legal owner of the land.
Example - listed shares
A SMSF acquires the beneficial ownership of shares or units in a listed company or unit trust when the SMSF obtains a properly executed off-market share transfer in registrable form.
Commissioners discretion
The Commissioner can make a written determination to exercise discretion and allocate all or part of a person's concessional or non-concessional contribution to a different financial year or disregard all or part of a contribution. Discretion can only be exercised if the Commissioner recognise there are special circumstances, meaning that the contribution is unusual, exceptional, abnormal or uncommon if applying the law would result in an unjust, unfair or otherwise inappropriate outcome.
Do you need help with your situation or if you wish to discuss the above, please contact us. Our contact details.
