The regulator said for a contribution to be allowable it must be an accepted type of contribution, such as mandated and non-mandated employer contributions, in-specie contributions, and contributions where the member has met age restrictions.
These contributions can only be accepted if the SMSF also has the member’s tax file number.
When accepting contributions, trustees must properly document them, including the amount, type and breakdown of components and allocate them to the member’s account within 28 days of the end of the month in which they are received. They must also accurately report contributions made to the fund during the financial year in their SMSF annual return.
The Tax Office continued that when a member joins an SMSF, the trustee should ask for their TFN, which can be submitted to the ATO when a new fund is registered or a new member added.
If a member does not supply their TFN the fund can’t accept member contributions for them, such as personal and eligible spouse contributions. It will also mean the fund will have to pay additional tax on their mandated employer contributions and there may be administrative delays if the ATO can’t identify the member from the other information provided Furthermore, the member may not be able to receive super co-contributions.
If the member hasn’t provided their TFN and the trustee has accepted member contributions for them, they will need to return the contribution within 30 days of becoming aware of it. However, if the TFN is provided within 30 days of receiving the contribution, the trustee doesn’t have to return the amount.
If a trustee does receive employer contributions on behalf of a member and they pay additional income tax because they did not have the member’s TFN, they may be able to claim a tax offset in a later financial year if the member later supplies their TFN.
A trustee can accept all types of non-mandated contributions, including downsizer super contributions (where the member has reached eligible age), however, for a member
turning 75, contributions must be received no later than 28 days after the end of the month they turn 75.
Where members don’t meet the work test, non-mandated contributions can be accepted for an extra 12 months where the member satisfied the work test in the financial year before the contribution was made, or their total super balance was less than $300,000 at the end of the previous financial year. They can also be accepted if the work test exemption hasn’t been used in a previous financial year.
For members over 75 years, trustees generally can’t accept non-mandated contributions. However, they can accept downsizer contributions (there is no maximum age limit) if they have the member’s TFN. For this cohort of members, super co-contributions and employer contributions that relate to a valid contribution period for the member can be accepted at any time.
In regard to in-specie contributions, trustees must not intentionally acquire assets (including in-specie) from related parties of their fund. However, there are some exceptions to the rule, including listed shares and other securities, and business real property (land and buildings used wholly and exclusively in a business).
