But what exactly is caught as a super “contribution”?
In ATO’s view, a “contribution” to super includes anything done to increase the balance of a super fund by someone whose purpose is to benefit the fund members.
A super fund’s balance is most commonly increased, and a contribution made, when:
- monies are transferred into the fund from the member or their employer (eg cash deposit, electronic funds transfer); or
- ownership of personal assets is transferred into the fund for no consideration (monies). For example, Ben owns 1,000 shares in BHP and transfers ownership of those shares to his SMSF and the SMSF doesn’t pay him any money in return.
The balance of a super fund can also be increased, and a contribution made, in other ways. Some examples are:
- payment of a super fund’s expenses by a member or another person or entity and the fund doesn’t reimburse them;
- someone other than the fund trustee does something to increase the value of a fund asset; or
- someone forgives a debt the fund owes.
Here are some examples of ways a contribution can be made:
Example 1
Mary is the sole-member of her SMSF, that was recently set up. Previously, she used to be a member of an industry fund. Her SMSF is yet to receive a large rollover from the industry fund, and there is only a small balance in the fund’s bank account. As the fund has a few outstanding invoices, Mary decides to transfer some cash from her personal bank account into the SMSF’s bank account. This transfer will increase the balance of the super fund and is regarded as a contribution.
Example 2
Aidan has recently set up an SMSF and opened a bank account for the fund. He transferred a small amount of money to test the bank account is working properly and the details are correct. Applying the same logic as Mary in the above example, the transfer will be a contribution.
However, not every increase in the balance of a super fund will be a contribution. For example, transfers of super from one Australian super fund to another (ie a rollover) are specifically excluded from being caught as a contribution.
Increases in the balance of a super fund when the fund earns income from its investments is also not a contribution.
Example 3
Chris’ SMSF owns a rental property which is leased. The rent Chris’ SMSF receives from the tenant increases the balance of his SMSF but it is not a contribution.
