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Martin Rafter

May 07, 2024

Reserving of non-concessional contributions

in SMSF Technical Forum

An auditor of an SMSF has advised the accountant of an SMSF that it is not acceptable to utilise a reserving strategy for non-concessional contributions. The auditor states that the ATO are "increasingly anti reserves for SMSFs" and that it is difficult for a trustee to DYI a first time reserve.

The fund deed allows reserving that is compliant with Reg 7.08.

Does the auditor have grounds to qualify the SMSF audit?

Thanks,

Martin

1 comment

Comments (1)

THE AUDITORS INSTITUTE

May 07, 2024

Hi Martin

My view is that it is unusual to see a reserve used for non-concessional contributions but it would not be grounds for the auditor to qualify their audit report on it.

This assumes that the SIS legislation has been followed along with the trust deed and the appropriate paperwork has been prepared.

DBA Lawyers have a good article re contribution reserves at (& legal advice should be obtained if to use a contribution reserve):

The ATO has details re the form to use to adjust concessional contributions and a reserve at:

https://www.ato.gov.au/forms-and-instructions/self-managed-superannuation-fund-request-to-adjust-concessional-contributions

At this page the ATO states that "This form cannot be used by a SMSF member using the reserve strategy for non-concessional contributions." This would suggest that non-concessional contributions can be used in a reserve strategy (but do not need to use a form).

If other forum members have a view please let the forum know.

Thanks

The Auditors Institute