Accepting contributions and rollovers
Any payment made to your fund in way of money or asset (other than money) is called a contribution. If the governing regulations of your fund comply with it, your SMSF can accept
- Contributions made by an employer
- Contributions made by oneself
- Contributions made through salary sacrifice
- Contributions made via super
- Contributions made by spouse
Proper documentation of contributions and rollovers is significant. Such documentation may include but is not restricted to amount, breakdown of components and type. Further, you need to allocate the contributions and rollovers to the fund members’ account within 28 days from the end of the month in which you had received them.
Contributions that are allowed
There are certain standards your fund must adhere to for accepting contributions to Super. Whether a contribution is deemed allowable or otherwise is determined by
- Contribution type – for instance, you can accept employer contributions (mandated) like super guarantee contributions from a member’s employer.
- Member’s age – for instance, you cannot accept non-mandated contributions from those members who are at or above the age of 75
- Whether members have quoted their TFN (or otherwise)
- Whether the contribution exceeds the upper ceiling.
These are bare minimum standards – there can be a wider array or rules governing your trust deed.
In specie contributions
In specie contributions are those contributions which are made to your Super fund in the way of an asset instead of money or cash. There are pre-stipulated rules and upper ceiling in regards to your fund’s contribution. It is crucial to be aware of these rules and limits and even more crucial is to monitor the amount contributed each fiscal year. Breach of upper ceiling of contribution attracts additional taxes.
Contributions: who can make them?
There are various acceptance tests of a fund’s contribution (catering to all the age groups):
| CONTRIBUTION TYPE | DESCRIPTION | UNDER 18 | UNDER 67 | AGE 67 TO AGE 70 | AGE 71 TO AGE 74 | 75 AND OVER |
| EMPLOYER CONTRIBUTIO (Mandated) | SG and contributions either made under an award or an industrial agreement | Yes | Yes | Yes | Yes | Yes |
| VOLUNTARY EMPLOYER CONTRIBUTIONS | Employer contributions other than mandated employer contributions; which include salary sacrifice | Yes | Yes | Yes subject to work test requirements* | Yes subject to work test requirements* | No |
| PERSONAL CONTRIBUTION from Members | Personal contributions made on an after-tax basis or as a tax deduction | Yes | Yes | Yes subject to work test requirements* | Yes subject to work test requirements* | No |
| DOWNSIZER CONTRIBUTION from Members | Personal contributions from sale of Main Residence | No | Yes from age 65 | Yes | Yes | Yes |
| SPOUSE CONTRIBUTIONS | Contributions made to the account of the spouse and received from a spouse under rules governing contribution splitting | N/A | Yes | Yes subject to work test requirements* | Yes subject to work test requirements* | No |
| CO-CONTRIBUTION from Government | Government payment applicable to eligible personal contributions | Yes | Yes | Yes | No | No |
The information above can serve as a guide only as the tax rules associated with Super can be fairly intricate. It is crucial to seek professional advice.
Those employees who are under the age of 18 and working less than 30 hours a week, getting paid less than $450 a month, or over age 75 do not receive SG contributions compulsorily.
To meet the work test requirements a person must be gainfully employed i.e. employed or self-employed for at least 40 hours within 30 consecutive days in the financial year the contributions are made.
