Individuals eligible to contribute to superannuation
are able to claim a tax deduction for their contributions provided they
satisfy a few conditions.
One of these conditions is that they must give a notice to the fund trustee of their intention to claim a tax deduction for the contribution and they must receive an acknowledgement of that notice from the trustee. Strict time frames apply. In particular, the notice must be given to the trustee before lodgement of the individual’s income tax return for the year the contribution was made (or the following 30 June if the tax return has not yet been lodged).
For members of non-SMSFs, whether the notice has been given and acknowledged is something the ATO checks as part of their review of personal tax returns. They have the data to do so because non-SMSFs are required to report to the ATO the acknowledgement of notices within 10 business days.
Unfortunately the ATO has identified approximately 25,000 taxpayers who have claimed a deduction in their 2018/19 income tax return but the ATO has no evidence of the fund having received and acknowledged the required notice. By law these notices and acknowledgements should have been given before the 2018/19 return was lodged. In the absence of an acknowledged notice, the deduction is usually denied.
However, for what I believe is the first time, the ATO is offering compliance concessions.
Specifically, the ATO has said they will not review the timing of the acknowledged notice of intent, provided these individuals obtain an acknowledgement from their fund before 30 June 2020. An unprecedented concession which I’m sure will be welcomed by these taxpayers (and their tax agent).
Note, we’ve also identified a number of SMSF members who incorrectly received the letter from the ATO. Whilst SMSF members are also required to give and receive the same notice/acknowledgement, SMSFs are not subject to the same reporting requirements.
SMSF members who received the letter can simply ignore it, however they should first check they have on file:
- a notice of intent to claim for the 2018/19 year, and
- an acknowledgement
from the trustee.