Which Contributions Can You Accept In Your SMSF?

Which Contributions Can You Accept In Your SMSF

Do you want to accept contributions to SMSF? There are minimum standards for accepting contributions into your Self-Managed Super Fund (SMSF), and the trust deed of your fund may have more rules.

Whether a contribution is allowable or not depends on:

  • The tax file number- whether you have the member’s tax file number (TFN) or not. If no, you can’t accept member contributions
  • the type of contribution – all mandated employer contributions, such as super guarantee contributions from a member’s employer are accepted
  • the age of the member – non-mandated contributions for members 75 years old or older can’t be accepted

Though you can’t accept an asset as a contribution from related parties of your fund, but there is an exception when the contribution exceeds the member’s fund-capped contributions limit.

Member’s Tax File Number

You must obtain a member’s TFN when they sign up for your fund and inform the Australian Taxation Office. This can be done when a new member joins or the fund is registered.

Although it is not required by law to provide a TFN, if:

  • the member may not be eligible to receive super co-contributions
  • your fund cannot accept member contributions on their behalf, such as personal and eligible spouse contributions
  • there may be administrative delays if the ATO is unable to identify the member from the other information you’ve provided
  • your fund has to pay extra tax on some contributions made to that member’s account

However, you must return the payment within 30 days if the member hasn’t given you their TFN details, but you took their contributions on their behalf. You are not required to refund the money if they submit their TFN within 30 days of receiving the contribution.

In case, you collect employer contributions on their behalf and paid higher income tax because the member gave TFN details later on, you may be eligible to claim a tax offset in the coming fiscal year.

Mandated employer contributions

Employer contributions that are required by law or under industrial agreement are made for the benefit of a fund member. Super guarantee contributions are among them.

Regardless of the age or number of hours a member works, you can accept mandated employer contributions for them at any time. For more information, talk to our tax accountants at KPG Taxation.

Consulting with KPG Taxation

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