Contributions an emerging trouble spot for SMSFs
With contribution errors already arising in some of the returns for 2017-18 following changes to contribution limits, SMSF practitioners have been urged to keep eye on this with clients.
Speaking to SMSF Adviser, BDO national leader of superannuation Shirley Schaefer said given the changes to concessional and non-concessional contribution limits that commenced from 1 July 2017, she expects to see some errors arise with contributions made to super during the 2017-18 financial year.
The cap for concessional contributions came down to $25,000, while the non-concessional contribution cap dropped down to $100,000 and there was also an additional threshold introduced preventing funds with a total superannuation balance above $1.6 million from making non-concessional contributions, said Ms Schaefer.
“Despite everyone’s best intentions, I think trustees will make mistakes,” she said.
“I have already seen some mistakes made. One of my clients didn’t realise that with the concessional contribution limit dropping from $35,000 to $25,000 for him, he would need to adjust his salary sacrificing arrangements. He contributed $33,000 in concessional contributions to super so he is $8,000 in excess.”
Ms Schaefer said there could also be some confusion with contributions made via the bring forward rule.
“I expect some people will think, ‘Well I contributed $540,000 in 2017 so that’s the three-year period over and done with, I can now put in $300,000,’ without realising that if they put in a larger amount in 2016-17, then they’ve used up forward years in terms of the contribution limit,” she said.
“With all of the changes, I just think it’s one of those areas where you’ll see some people make mistakes.”