In a recent video, Cooper Grace Ward Lawyers partner Scott Hay-Bartlem explained that the timing of a contribution could be very important as it can change when and whether it’s deductible to the person making it, usually the member, and how when it’s assessable to the SMSF and even whether the contribution can be accepted by the SMSF at all.
“For example, a contribution made in June, which is actually not technically made until July, can result in the contribution occurring in a different year,” said Mr Hay-Bartlem.
Determining when a contribution is made depends on how the contribution is being paid and whether it’s in cash, he noted.
“For some, it’s really obvious. For others, there are some traps. So, where my contribution is in cash, it’s when the super fund receives the cash,” he said.
“If we have a contribution by electronic fund transfer, it’s when the funds get into the SMSF bank account and that’s where it’s very important to watch our timing, particularly around the end of the financial year because there can be bank delays.”
If the contribution is being paid by cheque, then the contribution will be made when the SMSF receives the cheque, provided that it is banked promptly and is then cleared when it gets into SMSF bank account, he explained.
If there are assets that are being transferred, Mr Hay-Bartlem said the contribution occurs when the SMSF gets ownership.
“Now, if we have to register documents, for example, land, then when the SMSF has everything that it needs to get registered, we can consider the contribution to have been made,” he said.
“So, for real estate, that’s a signed stamp transfer and anything else that we need to get that transfer registered. Back in the old days, for example, certificate of title, if necessary.”
It’s important that SMSF clients get these things lined up in order to get their contribution made at the time they intend, he said.
