Some SMSFs use a contribution reserving strategy so that contributions received in June are allocated to the member’s account in July.
Advice from the ATO indicates that:
- The Assessable contribution is treated as part of either Employer or Personal Contributions (assessable) on the SMSF Annual Return
- The contribution should be included as part of the member’s closing balance figure on the SMSF Annual Return
Mclowd is designed on the basis that the tax is correctly allocated to the member’s account via correctly allocating the contributions as assessable where appropriate. Mclowd then produces the data for a SMSF Annual Return which meets ATO requirements described above.
The best way to deal to have a “contribution reserve” listed in the Financial Statements would be to effectively amend the Super Fund’s Financial Statements (from Mclowd) after processing the contribution as an actual assessable contribution in the relevant financial year.
How to update financial statements to include a contribution reserve
The following example illustrates what you need to do in Mclowd.
On the 25th of June 2020, Bill makes a $25,000 personal contribution for which he will claim a deduction. Under the SMSF Trust deed, Bill can formally allocate the contribution on the 15th of July 2020.
- You record the Assessable Personal contribution of $25,000 under Bill’s name in Mclowd on the 25th o June 2020
- You run the Year End process which “effectively” allocates the assessable personal contribution and related contributions tax to Bill’s member account
- The tax file for LodgeIt will meet ATO requirements in terms of the taxing of the personal contribution and its reflection in Bill’s member balance
- If you want the Financial Statements to have a “Contributions Reserve”, you download the Statement of Financial Position in an Excel format and save it
- On the Excel spreadsheet, you would then reduce the Member Balance and having a corresponding addition for the Contribution Reserve to reflect the “contribution reserving strategy”. You make any relevant changes to balances, totals etc.
- You need print off the resultant updated Excel spreadsheet for your records so that it includes the Contribution Reserve.
- You need to contact the ATO to reassess the contribution as per the following process. Request to adjust concessional contributions | Australian Taxation Office (ato.gov.au)