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Rakesh Sahgal

Apr 05, 2022

Recontribution of downsizer contributions

in SMSF Technical Forum

Members are 76 years old and contributed to SMSF in Sep 19 downsizer contributions of $600,000 but they took out $595,000 from SMSF. SMSF Tax return prepared audited and lodged on that basis).

On 05/09/20 they did in specie transfer of their own share portfolio for the amount of $595,000 (as per journal entry provided by accountants). Initially accountants say that it was mistake but now they have produced the copy of amended tax return and amended financials and have created journal entries.

Mind it most of the SMSF funds are invested in accountants own trust.

Can they do this and what are our obligations regarding that as auditor.

2 answers1 reply

Comments (3)

THE AUDITORS INSTITUTE

Apr 06, 2022

Hi Rakesh

Thanks, my view based on what I understand has occurred is that the Fund's 2019/20 accounts should show the listed shares purchased on 25/6/2020 for $595,000.

SIS section 66 has to be followed in that they have to be acquired / purchased at market value. That is you need to audit the price at which they were sold to the Fund.

It is not unusual for shares to take time to be transferred from one owner to another. I would request a statement that the shares has been transferred on 25/6/2020 & request a copy of the transfer paperwork to support that.

You could consider requesting a copy (or an extract) of their personal 2019/20 ITR's to support that the shares have been sold to the Fund as at 25/6/2020. If the member's have a tax agent re their personal ITR's you would also expect that the sale details will appear on their "prefill report" for the 2019/20 year.

Thanks

SMSF AAA