Important Reminder on Superannuation Contribution Timing This Financial Year
Are you planning to maximize your superannuation contribution caps this financial year? If so, it’s crucial to ensure your contribution is received by your superannuation fund within the current financial year.
Lessons from a Recent Court Case
A recent court case highlighted that contributions are considered made on the date they are received by the member’s superannuation fund, not the date they are initiated. In this case, the member intended for contributions made in late June to be attributed to that financial year. However, since the contributions were received in early July, the ATO and the Administrative Appeals Tribunal ruled they were made in the next financial year. This caused the member to exceed his contribution caps for that year.
The ATO’s View on Contribution Timing
The timing of superannuation contributions is crucial, especially as 30 June approaches. The ATO’s Taxation Ruling on superannuation contributions states that a contribution is made when the fund’s capital is increased, which is when the amount is received by the fund.
For example, an electronic transfer is considered made when the amount is credited to the superannuation fund’s bank account, not when the payment is initiated.
Summary of Contribution Methods and Timing
| How contribution is made | When contribution is made |
| Electronic transfer | When the funds are credited to the superannuation fund’s account. |
| Personal cheque | The date the cheque is received by the superannuation fund provided it is promptly presented and not dishonoured (and not post-dated).
Note – similar rules apply for promissory notes. |
| In specie transfer of listed shares | When the superannuation provider obtains a properly executed off-market share transfer in registrable form. |
| In specie transfer of real property | When the superannuation provider acquires the beneficial ownership of real property, which is when the fund obtains possession of a properly executed transfer that is in registrable form, together with any title deeds and other documents necessary to procure registration of the superannuation provider as the legal owner of the land. |
Timing is Key
This year, 30 June falls on a Sunday, a non-business day. Making a contribution over the weekend may not allow enough time for it to reach your superannuation fund. If you are with a large APRA-regulated superannuation fund, be aware of their cut-off dates for contributions to be allocated in the current financial year. Contributions received by your fund on 1 July 2024 will be treated as part of the 2024-25 financial year.
For SMSF members, electronic transfers between accounts with the same bank typically happen immediately, but transfers between different banks may take longer to clear, potentially causing delays.
Superannuation Clearing House Delays
If your employer uses a superannuation clearing house to make contributions, there can be delays from when the payment is made to when your fund receives it. Contributions are recorded by the superannuation fund only when received, which could push last-minute contributions into the next financial year, potentially causing you to exceed your concessional contribution cap.
Key Takeaway
Ensure your superannuation contributions are made well before 30 June to be received by your fund within the current financial year. Contributions are considered made when received by your superannuation fund, not when the transaction is initiated. Plan ahead to avoid exceeding your contribution caps and maximize your superannuation benefits.
Disclaimer:
The material and opinions in this article are those of the author and not those of AP Family Office. The material and opinions in the article should not be used or treated as professional advice and readers should rely on their own enquiries in making
