The Australian Taxation Office says the transitional bring-forward rule could “trip up” SMSF trustees, especially if they’ve triggered the rule before new super laws kicked in on July 1.
Speaking at the SMSF Technical Day for advisers in Sydney yesterday, July 18, ATO assistant commissioner Alex Affleck said the interpretation of the period when the old limits and new limits intersect has concerned the ATO.
Under previous rules, up to $540,000 could be contributed under the bring-forward rule by those who wished to combine three years’ worth of their annual non-concessional contributions, provided they satisfied other criteria.
Now that the annual non-concessional contribution limit has been reduced to $100,000 under new super rules introduced in last year’s budget, the maximum bring-forward amount will be $300,000.
However, trustees may find themselves in a position where they have already made one or two non-concessional contributions up to the old annual limit of $180,000 over the last couple of years and may not know how much they can subsequently contribute this year, Affleck said.
“This is an area where we have some concerns about whether this transitional rule will trip people up,” he said.
Here’s how it will work. Those who made the maximum contributions in 2015-16 and 2016-17 can make a contribution of as much as $100,000 in the third year, in line with the new rules, for up to $460,000 in total, Affleck said.
Meanwhile, if a trustee made their first $180,000 non-concessional contribution in 2016-17, before the new rules kicked in, their maximum bring-forward contributions would be $380,000 (one contribution of $180,000 and two contributions of $100,000).
“It’s not an easy concept for people to get their heads around,” Affleck said. “It is something that we do see a bit of a risk that individuals may get wrong. There have been a number of cases around people getting the three-year bring-forward rule wrong, which has had quite serious consequences for them.”
19 July 2017