If you have plans to contribute a property in-specie to your SMSF prior to 30 June with a view of partially allocating some of that contribution to a member account this year and the balance to a reserve, be careful.
The ATO have the view as per NTLG Meeting in June with minutes about to be released, that any contribution needs to be treated as a whole when it comes to allocations.
- Property worth $600k contributed in-specie in June 2012
- $150k allocated to the member’s account in June 2012 and $450k allocated to an unallocated contribution account with a view to allocate to member account in July 2012.
ATO’s view is that under this scenario, Trustees will breach SIS Reg 7.04(3) as they have accepted a contribution in excess of the fund – being a capped contribution limit of $450k. They also have the view that the Trustees breach SIS Reg. 7.08(2) which is that they must allocate the contribution to a member of the fund. In other words the contribution must be treated in its entirety. Partial allocations cannot be done.