The ATO this week issued an alert to SMSF trustees, urging them to “pay particular attention to the direction provided in the ATO release authority letter”.
Authority statements were sent to SMSFs with members who have made excess contributions.
The alert stressed the importance of trustees following the ATO’s directions to ensure they are “not incorrectly releasing excess contributions from member accounts directly to individuals … when the payment should be made to [the ATO]”.
“If you have made an incorrect payment you will be required to take recovery action to rectify the error,” the tax office said.
The SMSF Association’s head of technical and professional standards, Graeme Collley, said the main way trustees seem to be mixing up the process is by making payments to the ATO from their personal bank accounts when the payment should be directed from their fund.
Mr Colley said this is creating additional steps in the process of the SMSF releasing excess concessional or non-concessional contributions.
“What is happening is the individual makes the payment out of their own pocket while another amount is also paid by the superannuation fund to the ATO – the ATO then realising it has too much money has to refund part of it back to the individual,” he explained.
“It just causes a little bit of a mix-up.”
Mr Colley said the ATO is likely, however, to be lenient with trustees who confuse the steps in the process, given that this is a new system.
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