David Busoli, principal of SMSF Alliance, added this can be confusing for members’ personal tax accountants.
He said every year his firm is contacted by SMSF members who say that their tax accountant can’t lodge their personal tax return until SMSF Alliance has informed the ATO of their personal deductible contributions or have lodged their SMSF accounts.
“Only APRA funds report personal deductible contributions to the ATO within 10 days of being provided with a valid S.290-170 notice,” he said. This enables the ATO to update the member’s contribution information which their personal tax accountant can access via the ATO’s online portal.
However, Mr Busoli said SMSFs do not have this system on which to rely.
“Even the lodgement of the SMSF returns has no effect,” he said.
“If the SMSF has received a valid S.290-170 notice, contributions tax will be levied on the member’s personal contributions but, unless their personal tax accountant claims this deduction in their personal tax return, the ATO’s records will not register this.”
“The only way the ATO will know about any personal deductible contributions from a member is when they do their own personal tax deductions,” he said.
Mr Busoli said when an SMSF member makes a personal deductible contribution they should get confirmation from the fund that they have advised it of the tax-deductible nature of the contribution.
“Then, armed with that piece of paper, they can do their personal tax return,” he added.
He added that a problem can also occur if the member does not inform their accountant of their contribution under the assumption the accountant already knows.
“The accountant won’t know unless the member tells them. If the deduction is not included in their personal tax return, not only will they miss out on the deduction, their SMSF will deduct contributions tax from the contribution” he said.
“To combat this problem, it’s important that everyone keeps their wits and communicates any contributions via the proper procedures.”
