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SMSF Contribution Reserving to Avoid Excess Contribution Tax
26 Jun, 2012

This occurs in the circumstances where a contribution is made to superannuation in June, and if it results in excess contributions for the member for that particular financial year, it could be reserved and allocated to the member’s benefit in July. This results in the contribution being counted under the cap in the following financial year and therefore not excessive in the current year.

The ATO also stated that the allocation of the reserve in July would not affect the deductibility of the contribution.

It is important to note that this strategy will only work if a contribution is made in June. If a contribution is made in any other month of the year, it would need to be allocated by the 28th day of the next month, which would still be in the same financial year.

 

 

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