The ATO is consulting with the industry over the requirement for SMSF members to object to assessments raised in error due to the limitations of information reported to the ATO by funds.
Speaking to SMSF Adviser, AMP SMSF’s Peter Burgess explained there are currently inefficiencies related to superannuation contribution reserving strategies.
“If you are using this contribution reserving strategy, you have to report that contribution in the financial year the fund received it, even though it is not been allocated to the member’s account until the next year.”
“The strategy is typically used by clients who already contributed up to their caps in one financial year and now they’re looking to make a further contribution, but they don’t want it to count against their cap until their next year.”
“Because the fund has to show it as being allocated to the member’s account, it typically gives rise to an excess determination. And the ATO has said … that the taxpayer then has to object to that determination.”
The objection process is particularly time-consuming for taxpayers, Mr Burgess explained, and the ATO has agreed to consult with the industry and identify options which are not as time-consuming or inefficient as the current approach.
“Presumably this means finding a way of allowing taxpayers to simply request an amendment to their reported contributions rather than needing to go [through] a formal objection process. That in our view makes a lot of sense.”
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