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SMSF in specie contributions

Newbie

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Can a SMSF non member make an in specie contribution to an SMSF on behalf of the members?

For example a parent making an in specie contribution  to an SMSF on behalf of their children (Fund members) via the transfer of business real property.

If so, how would this contribution be treated by the Fund (i.e. concessional or non concessional)?

Thank you

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Most helpful response

Devotee Registered Tax Practitioner

Replies 2

The member contributions are NCC unless the member nominates CC in writing.

 

it has been advised that such contributions are subject to concessional caps only 

 

Probably because contribution is not directly from a member, not because it is in specie.

 

 

7 REPLIES 7

Initiate

Replies 1

Hi Connor2407

 

I believe you can, only for assets excluded by s66 which includes business real property and listed shares. So in this case should be ok, however have to be at arm's length value. Regarding concessional & non concessional it will be up to the member's eligibility and whether they want to claim in their personal tax return.

 

hope that helps.

Newbie

Replies 0

Thanks.

So it is OK for a person who is not a current member of an SMSF to make a contribution on behalf of another person who is a current SMSF member?  And they can make a choice as to whether to treat as concessional or non conceessional?   

Devotee Registered Tax Practitioner

Replies 4

You need to check the trust deed  -  contributions section.

Many deeds allow for this, but you may need a deed update first.

 

It will still be treated as a member contribution, so normal caps apply.

 

Agree with other answer about CC and NCC.

 

They may want to do it this way to save paying stamp duty twice, but that is legal stuff.

 

 

 

 

 

 

Newbie

Replies 3

Thanks

Deed is current so no issues there.  My concern is concessional vs non concessional.  Following discussions with ATO superannuation helpline, it has been advised that such contributions are subject to concessional caps only (although I have having great difficultly in confirming why this is the case). 

Most helpful response

Devotee Registered Tax Practitioner

Replies 2

The member contributions are NCC unless the member nominates CC in writing.

 

it has been advised that such contributions are subject to concessional caps only 

 

Probably because contribution is not directly from a member, not because it is in specie.

 

 

Newbie

Replies 1

Thanks Bruce4Tax

In the interim, this is what I found on the ATO website:

Other family and friend contributions

Other family and friends contributions count towards your concessional contributions cap. These are contributions made for you by anyone other than you, your spouse or your employer.

Your fund will report at this label any contributions made by:

  • a spouse living separately and apart from you on a permanent basis
  • a parent, child, relative or friend if you are 18 years old or older
  • any other third party other than an employer or your spouse.

If you are under 18, contributions made by other family and friends are reported as child contributions at the spouse and child contributions label.

 

It does not give the option, but rather says it is cc in all cases?

 

ATO Certified Response

Community Support

Replies 0

Hi @Connor2407

 

Your last post is correct. You have located the relevant information from our website.

 

The fund is able to accept the in-specie contribution from the related party as it is a business real property. It should be treated as an 'other family and friend contribution' which means it is a concessional contribution.

 

If the children already owned the business real property (the parents transferred the property to the children rather than the fund), the children could transfer ownership to the fund and treat it as a personal contribution. In turn, assuming that no deductions are claimed, it would be considered a non-concessional contribution.

 

You can check out the in specie (asset) contributions section on our website for more information.

 

Hope this helps.

 

Thanks,

 

ChrisR