Timing of Contributions – Beware EFTs and Supposed Instantaneous Transfers

Recent AAT cases have shown that the ATO will strictly apply the contribution timing rules set out in the “Superannuation Contributions Tax Ruling” – TR 2010/1.

In particular, where contributions are made by electronic funds transfer, the contribution will be made when the contribution is credited to the account of the superannuation fund.  Electronic fund transfers are not necessarily instantaneous: even if there is a confirmation notice that the transaction has been completed.

If contributions are to be made by electronic funds transfer then it would be prudent to effect the transaction 2 or 3 business days before 30 June.  This is particularly so for 2012 as 30 June is a Saturday.  In this case contributions which appear to be have effected on Friday 29 June (from the contributor’s point of view) may not, due to the weekend, appear in the fund’s account until Monday 2 July.

Strangely, it may be more prudent to make a contribution on 29 June by a personal cheque.  So long as the personal cheque is in the possession of the trustees (or their agents) on 30 June and banked within a few days of receipt, the contribution will be treated as having been made on 30 June.  (PS the cheque when presented must be honoured for the contribution to be effected on 30 June.)