We have encountered a number of instances where Div 293 payments have been paid by an SMSF without first obtaining the ATO’s approval. These will be treated as loans and will need to be repaid. They will also raise an audit comment.
Please ensure you follow the correct procedure if paying from the SMSF as per the steps below.
If a Div 293 liability arises the Trustee will receive an ATO assessment personally for the amount. The assessment notice will give them the choice of either paying it from their personal funds or electing for a Super Fund to pay the benefit. Without the election being lodged and accepted by the ATO the assessment cannot be paid by the SMSF.
Once the ATO receives the election (via either a paper form provided with the assessment or by the Trustee lodging the election via MyGov) the SMSF will receive a release authority to make the payment from the ATO. Without the release authority the SMSF cannot make the payment.
You have up to 60 days from the date of your Division 293 assessment to make your election. This does not change the due date for payment so late payments will still incur interest.
