The Australian Taxation Office (ATO) has issued a final determination on the cashing of self-managed superannuation fund (SMSF)member benefits.
As per the determination, SMSFD 2011/1, a benefit from an SMSF will be deemed to be cashed at the time the cheque or the promissory note is received by the beneficiary as long as several conditions apply.
The first is that at the time the cheque or promissory note is prepared, the money from the fund is payable and available for payment.
The trustee(s) of the SMSF must also ensure the money is paid promptly.
Furthermore, the money has to be paid and all of the necessary requirements of the Superannuation Industry (Supervision) Act have to have been satisfied.
If all of these elements are satisfied, the time the cheque is actually physically cashed is not relevant, only the day the cheque or promissory note is.
However, according to Cavendish Superannuation Queensland manager David Busoli, the ruling had another relevant declaration.
“This ruling also mentions in passing that a benefit cheque drawn and re-banked into the fund will not be regarded as having been cashed,” Busoli said.
This had been a popular practice among members in the past, he said.
“This is extremely important as it means that any recontribution strategy will require the benefit cheque to be cleared through the member’s personal account and a new cheque drawn by the member for their contribution to the fund,” he said.
The final determination on the cashing of member benefits follows on from draft determination SMSFD 2010/D1.
