In-Specie Double Contribution

11 Jun 2019

Written by

David Busoli, Principal

A reader of yesterday’s post has asked if there are any issues with making an in-specie contribution to an unallocated contributions reserve. There are no issues if the whole of the in-specie asset is to be added to the reserve but the ATO have previously disallowed the splitting of an in-specie contribution.

Let’s say we have John, a 60 year old member with a total super balance of $1m, wishing to contribute a $400k portion of a commercial property. He may wish to contribute $100k in June this year to be counted against his NCC cap this year and $300k, also in June this year, to be counted against his NCC cap next year. If the whole parcel is transferred into the fund in a single transaction the ATO are likely to treat it as a contribution that will count against his NCC cap this year thus creating a $100k excess. If a tenant in common transfer of $100k was followed immediately afterwards by another for $300k the unallocated contributions strategy could be used. This will incur higher transfer costs but the uncertainty would be removed.

It is arguable that cash transactions will be treated differently but, generally, I would split them as well so, rather than a member making a single $50k concessional contribution in June, I would suggest two $25k contributions.

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