Tim Miller, technical and education manager for Smarter SMSF, said if any SMSF transactions haven’t occurred by 28 June, they will not be able to be included this financial year.
“That then has its lead on issues, particularly around pension shortfalls, but also contributions and deductibility from a personal deductible contribution point of view,” Miller said.
Miller added that if an SMSF is using a clearing house, that date should be even earlier, around 14 June, as routine system maintenance in preparation for the new financial may impact time frames.
Several contribution strategies should be top of mind in preparation for the end of the financial year, Miller said, including the standard ones such as non-concessional or concessional contributions, but also non-standard ones, particularly around the use of reserves.
“It’s really important to understand that all these various contribution strategies exist and what becomes critical leading up to 30 June,” he said.
Miller said one of the key strategies to consider leading up to 30 June is salary sacrifice and recent legal rulings have emphasised the importance of ensuring these are done correctly to avoid excess contribution issues.
“There have been cases where people had implemented salary sacrifice strategies with their employer, but the implementation of those strategies wasn’t done according to what they wanted, and it created an excess contribution issue,” he said.
“Ultimately, the ATO has come back and said tough luck, this is what’s been implemented by yourself and the employer, whether you’re in agreement or not, it’s what’s occurred. It resulted in an excess, there is no way of rectifying that excess contribution.”
He said if an SMSF is using salary sacrifice or considering using salary sacrifice for the 2024–25 financial year, they should be discussing this now with their employer to ensure the strategy is implemented correctly moving forward.
Aaron Dunn, CEO of Smarter SMSF, said SMSFs should also now be considering the uptick in concessional contributions and making adjustments for that as well.
“We’re moving from $27,500 to $30,000 so there should be that sort of adjustment that’s being made,” Dunn said.
Dunn added that contribution strategies should not be looked at in isolation, and there can be a blend of strategies that can be used to maximise tax opportunities.
“You might be using concessional contributions, whether they’re deductible contributions or salary sacrifice, but you can then also look back up to five years and see what actual additional contributions are available to capitalise on from a deductibility point of view,” he said.
“It’s these interchanges or intersections that we get with different strategies where it might be a re-contribution, but it could, for example, intersect with a downsizer contribution. You may not want to necessarily add any monies to the fund overall but you’re looking at it from an estate planning point of view and in lieu of making that downsizer contribution because you need that money for maybe the next home, you combine those two strategies to get the actual outcome that you want for your client.”
