BT outlines common traps with personal super contributions
With many clients looking to lodge their tax returns soon, BT has flagged some of the key requirements for claiming tax deductions for personal voluntary contributions.
BT head of financial literacy and advocacy Bryan Ashenden said while the eligibility rules for claiming a tax deduction for personal voluntary contributions made to a superannuation fund have been relaxed since 1 July 2017, there are some important processes that must be followed.
Mr Ashenden said clients must complete a notice of intent to claim a tax deduction, for example.
“This notice needs to have been lodged with the fund that the contributions were made to before the client lodges their income tax return,” he said in a BT Technical Services podcast.
“Unfortunately, many clients who complete their own tax return miss this requirement, which means they are not eligible for the deduction when lodging their tax returns. There is no extension of time available to lodge the notice if missed.”
He also cautioned that if the fund no longer holds some or all of the contribution because it has been rolled to another super fund, has been used to commence an income stream, or even withdrawn under the early access to super measure, then some or all of the deduction may no longer be allowed.
He also stressed the importance of reassessing a client’s ability to make certain personal contributions to super against their total super balance as at 30 June 2020 for this 2020–21 financial year.
“While the falls in markets may mean that for some client who were previously above the $1.6 million total super balance, they may now be able to make additional contributions if their balance has now fallen below this threshold,” he explained.
“For clients in pension phase, there is currently no adjustment available to top up pension accounts where the transfer balance cap maximum of $1.6 million has previously been reached.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
