Speaking to SMSF Adviser, AMP SMSF’s Peter Burgess explained that many have previously recommended this strategy should only be used for personal contributions which are claimed as a tax deduction, because with these contributions there are potentially more bases on which the trustee can argue the amount is unallocated.
“With an SG or salary sacrifice contribution it can only be a concessional contribution and only in respect of an employee of the employer so the trustee has less of a basis not to allocate the contribution to the member’s account,” Mr Burgess said.
However, AMP SMSF received guidance from the ATO last week which suggests the ATO is not concerned about the reasons why the contribution was not allocated.
“As long as this new form is used and proper records are kept, the reserving SG and salary sacrifice contributions is OK. It just means the application of a concessional contribution reserving strategy is perhaps much broader than first thought,” he said.
As reported in SMSF Adviser, the ATO has created a new system for SMSFs using a contribution reserving strategy with the release of a form titled Request to adjust concessional contributions, following complaints about costly and complex roadblocks to implementation.