We have even had one recently where we were told the SMSF return had to be relodged as it must not have advised the ATO correctly. In both cases, they are wrong.
If a member makes a personal contribution, it is non-concessional by default. It only becomes concessional when the superannuation fund receives a valid S.290-170 notice and responds accordingly. It is this response that the member must show to their personal accountant to enable the deduction to be taken.
This is the same for both APRA funds and SMSFs. There is a difference in reporting though. APRA funds report personal deductible contributions to the ATO within 10 days of being provided with a valid S.290-170 notice. These are promptly reflected in MyGov.
Not only are SMSFs not required to report, they are physically unable to do so as there is no ATO protocol that allows them to. For SMSFs, the ATO relies on the member’s personal tax return to determine if they have made a personal deductible contribution to their SMSF.
The problem is that some personal tax accountants have become too used to using a regular short cut to determine a member’s concessional contribution status. They simply look it up on MyGov. That’s fine provided the member isn’t contributing to an SMSF. I wonder how many deductible contributions are missed due to this.
If the SMSF has received a valid S.290-170 notice, contributions tax will be levied on the member’s personal contributions irrespective of whether their accountant takes the deduction or not. If not, the member’s SMSF account will have been taxed without the member receiving the benefit of the personal deduction – not the best scenario.
In the SMSF’s tax return there is a label for Personal Contributions under the member’s balances. SMSF’s do report this type of contribution, but it is mixed up with others. The return doesn’t separate this type of claimable personal contributions, so there is no way lodgement of an SMSF will trigger the D12 validation seen in the portal/myGov.
Never understood why the SMSFR doesn’t have a label for this, after all these years!
Specifically Label B is completed. The ATO’s guidelines for this
Write at label A the total value of employer contributions made for the member in 2023–24. Don’t include:
contributions made by the member, even where the member has given the SMSF a Notice of intent to claim or vary a deduction for personal super contributions that applies to the contribution and the SMSF has acknowledged it (include these at label B Personal contributions)