PLAN WELL AHEAD FOR CRITICAL SUPER FUND TRANSACTIONS

As a follow on from my previous article on Trustee’s responsibilities, I will now talk about one of our basic challenge - “too little time to get the important matters attended to”, which we are familiar with on a day to day basis, are also applicable to Self Managed Superannuation Fund management. 

I recently came across cases where Trustees of DIY SMSF initiated contribution activities right up at the last minute (ie, June 30).  In one case, the contribution was $50,000 and it was from a gain on sale of a property.  After meeting with the accountant who had provided the appropriate advise, the bank and settlement agent did not contribute the $50,000 proceed into the appropriate SMSF bank account of the Trustee. It was instead contributed into the personal account of the Trustee. By the time the Trustee found out, it was already July 4, 2010. There was nothing much the Trustee could have done.  As a consequent, the Trustee had failed to make the appropriate contribution at the requisite time at no fault of his/ her part. From an SMSF auditor perspective, if the Trustee had deemed the amount as contribution into the DIY Super Fund before 30 June, then the auditor may have to qualify the audit report accordingly because of the contravention. However, if the Trustee did not treat the amount as contribution, then it will result in higher personal income tax position for that year for the Trustee.

The lesson learnt from the above, is that we need to give ourselves more time to initiate and execute such critical transactions failing which will have financial implications. So, if something is really important, then do give yourself ample time before you execute such transactions.  Also, do make sure lines of communications with all professional parties involved, in this case the banker and also settlement agent are crystal clear (and also in black and white), so that if something does go wrong, you will know where it happened.

This article is not a financial advice, and author is Not a financial advisor or tax agent.  Please solicit appropriate advise from professionals before making any financial decisions.