What is a contribution & when is it made?
The ATO has recently released a new tax ruling (TR 2010/1 Income Tax: superannuation contributions) that sets out what constitutes a contribution to a superannuation fund.
The ruling outlines that a contribution can be anything of value which increases the value of a superannuation fund provided by a person whose aim is to benefit one or more members of the fund.
As well as the obvious, it can be:
· Shares or property transferred into the fund at nil or below market value consideration,
· The paying of an expense on behalf of the fund, or
· Forgiving of a loan made to the fund or repaying a debt of the fund.
The ruling also looks at the timing of contributions and when in fact a contribution is determined to have been made. For most this may appear to be a rather academic question. However this is important in determining in which year a deduction might be claimed, and ensuring the maximum contribution limits are not breached.
Basically, the ATO has determined that the contribution is actually made when the fund value is increased or ownership of an asset is obtained or the fund in some way benefits from the receipt of an amount. For example, if money was paid into an account say by electronic transfer or cheque, it is the date the payment was received (unless the cheque subsequently dishonoured). In the case of the transfer of shares or property, it is when legal title passes to the fund (not when the transfer may be registered).
POSTED: 11-Jun-2010