Promissory Notes Can Save the Day
Hopefully trustees have not left their contributions and pension payments to the last minute as there is a likelihood that they may not be completed by 30th June if electronically initiated this week. As a solution, SMSFs can find a promissory note useful to back a bank transfer that might miss the 30 June deadline.
A contribution can be made by supplying the fund trustees with a promissory note dated no later than 30th June and cashed in the first week of July. Pensions may also be paid by the fund issuing a promissory note to the member dated no later than 30 June. To be acceptable, the fund will need to have sufficient cash to cover it on issue and it must be cashed within a few days.
Contributions may also be made in specie by supplying the fund with fully completed transfer documents no later than 30 June. Be careful though as a transfer from an entity, other than the member or spouse, will be a concessional contribution.
In specie payments to members must be avoided for pension purposes as these are lump sum drawdowns so do not count as pensions.
Alliance Partners may access a sample promissory note from the Strategy Matters section of our SMSF Toolbox.