Critical steps flagged with notices of intent

Another important step in the process of claiming a deduction for a personal contribution, said Mr Busoli, is providing a notice of intent.

The notice of intent, he said, must be submitted to the super fund by the earlier of: 

• The day the member lodges their personal income tax return for the income year in which the contribution was made, or
• The end of the income year following the income year in which the contribution was made.

“Note that the fund cannot accept the notice if the member is not a member of the fund when they provided the notice, they have lodged a contribution splitting request for the contribution or the fund had begun to pay a pension based on all, or part, of the contribution,” he warned.

Mr Busoli said members also need to think about whether their taxable income is sufficient for the contribution to be worthwhile.

“In addition, any amount claimed that results in a personal tax loss will be disallowed by the ATO and counted as a non-concessional contribution (NCC). This could result in an inadvertent trigger of the NCC three-year bring forward rule,” he warned.

Where the notice of intent has already been lodged but the client decides that they don’t wish to claim the amount they have stated, a notice of intent to vary must be lodged with the super fund before the member’s tax return is lodged, he said.

Mr Busoli explained that his firm will ask for confirmation of the nature of personal contributions before commencing a pension or completing a fund’s tax returns.

“This requires the clearance of unmatched items for which we often require the assistance of the adviser or member,” he said.

Where members are lodging their personal tax returns earlier than the SMSF, the firm will ask to be provided with the notice beforehand, said Mr Busoli. It will then provide the client with an acknowledgement of the notice.