Making Non-Cash Contributions to Your SMSF
When transferring non-cash assets like unit trusts to your self-managed superannuation fund (SMSF), it's important to understand how these transactions are treated under tax law. In a recent case, units valued at $68,370 were transferred from a company to an SMSF, intended as a personal non-concessional contribution by the taxpayer.
However, the Australian Tax Office (ATO) viewed these transfers differently, classifying them as deemed dividends under Section 109C of the tax code. This classification was based on the nature of the transfer: even though no cash changed hands, transferring property to an SMSF still counts as a 'payment'. Additionally, both the trustee of an SMSF and its members are considered 'associates' under Sections 109ZD and 318(1)(d), which influences how transactions are assessed.
The Administrative Appeals Tribunal (AAT) supported the ATO's position, indicating that the legal definitions and relationships in this scenario met the criteria for deemed dividends. The implications are significant, affecting how such contributions are taxed and reported.
Issues with Record Keeping
Another major point of contention in this case was the lack of reliable documentation. The taxpayers in question could not provide primary documents to verify the transactions recorded in their general ledger for the years 2012 and 2013. Without audited accounts or independent preparation, the AAT found it difficult to accept the general ledger entries as sufficient evidence of the transactions.
This case highlights the critical importance of maintaining thorough, accurate records and ensuring that personal and business finances are clearly separated in company accounts. Proper documentation supports the legitimacy of transactions and is essential for smooth dealings with tax authorities.
Need More Information?
For further advice or assistance with your SMSF and how to manage contributions and tax implications, please contact Tax Ideas Accountants & Advisers at +61 2 83181545 or schedule an appointment through our live calendar.
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