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How can I reduce my excess contribution tax and maximise my tax deductions outside of my Self Managed Superannuation Fund (SMSF)?

This can be achieved by using contribution reserves.

The Australian Taxation Office (ATO) released Interpretative Decision 2012/16 (ID 2012/16)  that provides for greater flexibility in terms of allocating concessional contributions in adherence with Superannuation Industry Supervision Regulations 1994 (SISR 1994).

Generally ID 2012/16 permits members to make contributions to their SMSF; receive the tax deduction in the same year but not have the contribution counted towards their contribution cap until the following financial year, provided certain conditions are met.

These conditions include:

1.  That the SMSF trust deed permits it;

2.  The contribution is allocated to a contribution reserve by the trustee upon receipt; and

3.  That the contribution is reallocated from the reserve to the member's account within 28 days of the following month. 

Refer Division 7.2 of the Superannuation Industry Supervision Regulation (SISR) 1994.  

Below is an excerpt from ID 2012/16 giving an example of using a contribution reserve and its benefits. 

... A member of a self-managed «superannuation» fund made a personal contribution of $25,000 to their fund on 4 April 2011. The trustees of the fund immediately allocated this contribution to the member in accordance with subregulation 7.08(2) of the SISR.

The member made a further personal contribution of $25,000 on 28 June 2011. The trustees applied this amount to an unallocated contributions account that had been established in accordance with the governing rules of the fund.

On 4 July 2011, the trustees allocated the amount credited to the unallocated contributions account (that is, the amount of the 28 June contribution) to the member as a contribution for the member with effect from that date (and not from 28 June 2011 when the contribution was received).

The member satisfied all the conditions necessary to deduct both personal contributions made in 2010-11 income year and was allowed a deduction of $50,000 in his income tax assessment for that year. The member's concessional contributions cap for the 2010-11 financial year was $25,000...