Contribution Classifications

Once established, the fund may accept contributions and rollovers. All contributions will generally be deposited into the fund’s bank account. Contributions may be made by cheque, electronic transfer, periodic payment or transfer of assets into the fund in accordance with the law. Importantly, all contributions made to the fund must be identified as to what type of contribution the money/ assets represents.

In addition to contributions members may also wish to transfer their existing superannuation entitlements (or part of the results from the sale of an eligible small business) into the SMSF.

Outlines of the types of contributions are as follows:

Please note that the following information assumes that the Trustees have a Supercorp Trust Deed. If this isn’t the case the Trustees will have to satisfy themselves that their Trust Deed allows these contributions.

Mandated Employer Contributions
(Super Guarantee Contributions)

SMSFs can accept mandated employer contributions at any time. Trustees may accept mandated employer contributions for a person of any age regardless of how many hours they work. Mandated employer contributions are contributions made by an employer for the benefit of a fund member that are:

  • Contributions to reduce the employer’s potential liability to the Superannuation Guarantee Charge; or
  • Superannuation guarantee shortfall components; or
  • Contributions made in order to satisfy an obligation under an industrial award or agreement; or
  • Payments to a Fund from the Superannuation Holding Accounts Reserve.

Other Contributions

Contributions other than the above mandated employer contributions can only be accepted in the following circumstances.

  • For members under 65 years of age at the time of the contribution; and
  • For members aged 65 but less than 75 at the time of the contributions and where the member is Gainfully Employed for at least 40 hours in a period of not more than 30 days during the financial year.

Concessional Contributions

These are employer (mandated or non-mandated), self-employed or member tax-deductible contributions. From 1st July 2009, $25,000 (indexed) maximum per year per person applies. A transitional maximum contribution of $50,000 (not indexed) for persons over 50 years of age at 30 June 2010 applies.

A contribution tax of 15% applies to all concessional contributions, however, contributions in excess of this limit are subject to an additional tax rate of 31.5% (46.5% in total).

Non Concessional Contributions

Formally known as Undeducted Contributions, these are personal member contributions for which no tax-deduction is claimed. From age 18 to 65 years of age the maximum contribution is $150,000 per person per annum. This can be increased to $450,000 provided no further contributions are made for the following two years.

Members aged 65 to 74 can contribute $150,000 maximum provided a work test is satisfied. This work test is 40 hours over 30 consecutive days at any time during the financial year that you contribute.

Non Concessional Contributions within these limits are not taxed by the SMSF, however any amounts in excess of these limits will be taxed at 46.5%. Note that this is a personal tax liability.

Warning: Exceeding the contribution limits can result in very high taxation outcomes. Supercorp recommend that Trustees switch to the YourSMSF Daily Service to closely monitor contribution levels if they are close to the limits each year.

Spouse Contributions

Spouse Contributions may be made by a member’s spouse under certain conditions. The person making the contribution may or may not be a member of the fund, and the relationship may be legal or de facto.

There is no age limit or employment test for the person making the contribution, however, the spouse receiving the contributions must be aged under 65 for the contributions to be permitted. If the spouse is aged between 65 and 70 years, they must be gainfully employed for at least 40 hours in any consecutive 30 day period for the contribution to be allowed.

A tax rebate of up to $540 may be available to the person making the contribution, subject to the level of income of the member’s spouse.

Splitting Contributions between Couples

Fund Members have the opportunity to split Tax Deductible superannuation contributions with their spouse. The following guidelines apply:

  • Splitting of contributions will take place once per year, by a written instruction from the contributing member to the Fund trustees. This only applies to contributions received in the financial year just ended and does not apply to existing member account balances;
  • Couples must be either married or living in a bona fide de-facto relationship;
  • The receiving spouse must be under age 65 and Gainfully Employed if over their preservation age (see the Paying Benefits section below);
  • Spouse splitting is not available for non concessional contributions.

In-Specie Contributions

An in specie contribution is the contribution of an asset owned by a member, rather than cash, to the fund. It can be made by a member, employer of a member or a member’s spouse (subject to contribution rules).

Trustees of SMSFs are generally prohibited from acquiring assets from related parties including members and member’s spouses. Please see the Investment section in this PDS for details about which investments can be purchased or acquired from related parties by the SMSF

In specie contributions may have tax consequences (e.g. CGT liability) for the contributor and Supercorp recommends that members and Trustees obtain appropriate professional advice before proceeding.

Roll-Over and Transfers

An SMSF rates equally with other regulated superannuation funds and members entitlements can generally be rolled-over or transferred from other superannuation funds at any time with the approval of the member. Unlike contributions there is no age or employment requirement to complete a Roll-over.

In addition to superannuation entitlements, business owners with net assets of less than $6 million may be able to rollover up to $1,045,000.00 of capital gain which results from the sale of their active business assets without incurring CGT. Members and Trustees wishing to take advantage of this opportunity are strongly recommended to seek professional advice before proceeding.