Accepting contributions and rollovers
As a trustee, you must know the rules for accepting contributions and rollovers. These rules are set out in:
- your fund's trust deed
- the super laws.
Make sure any contributions and rollovers are:
- properly documented, including the amount, type and breakdown of components
- allocated to the correct member's account.
Contributions
A contribution is a payment made to your fund in the form of money or an asset other than money (called an 'in specie' contribution).
You must allocate contributions to each member's account within 28 days after the end of the month that you receive them.
You must accept contributions according to:
- your fund's trust deed
- the 'contribution standards' in the super laws
- any investment restrictions.
Whether your fund can accept contributions for a member will depend on:
- the type of contribution
- the age of the member
- whether they have quoted their TFN
- whether the contribution is a fund-capped contribution.
If the governing rules of your fund allow it, your SMSF can generally accept:
- employer contributions
- personal contributions
- salary sacrifice contributions
- super co-contributions
- eligible spouse contributions
- in specie contributions.
As a trustee, you generally cannot acquire non-cash assets from related parties, such as:
- fund members
- their families and partners
- related companies and trusts.
There are some significant exceptions, including:
- listed shares and securities
- business real property (land and buildings used wholly and exclusively in a business).
Example
A member of XYZ Super Fund owns a single residential property and wants to contribute it to the fund. The trustees cannot accept the contribution as it would be a breach of the investment restrictions (because the member is a related party of the fund and the trustees cannot acquire an asset from a related party unless an exception applies).
You should also consider how capital gains tax applies before you transfer or sell any assets to the fund as an in specie contribution.
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You may incur a penalty if you fail to comply with the contribution standards and investment restrictions.
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Rollovers and transfers
Once your fund is established, a member can rollover or transfer some or all of their existing super benefits from other super funds. Before they can do this, they need to provide proof to their former super fund that your SMSF is a regulated fund and is eligible to receive rollovers. They can obtain proof by visiting superfundlookup.gov.au
Members can use a Request to transfer whole balance of superannuation benefits between funds (NAT 71223) form to rollover the whole balance of their super benefits to your fund. They must also meet the requirements of the fund they are leaving.
Generally, when the ABN of your fund first appears on SFLU, a message will show that the application is still being processed and provide an estimated date for completion. At this stage, no rollovers or super guarantee payments can be accepted by your SMSF.
Once your application is fully processed, the status of your fund will be updated to appear on SFLU as 'Registered - Status not determined'. When this status appears the fund will be able to accept transfers, rollovers, directed termination payments and contributions.
Your fund's status will be updated after lodgment of its first SMSF annual return when it will be assessed as either a 'Complying' or 'Non-complying' fund. If your fund is assessed as a complying fund a Notice of compliance will be issued.
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Other super funds cannot process a rollover request until the status of your fund has been updated on SFLU to 'Registered - Status not determined'.
You must register your members correctly at registration as super funds will verify the details of members requesting the rollover to make sure they are a member of your fund. If your members are not registered or not registered correctly this may delay any rollovers into your fund.
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If a member only wants to rollover part of their super benefits from another fund, they must contact the fund directly to organise the paperwork. Their fund will complete a Rollover benefits statement (NAT 70944). The completed statement will be sent to your fund within seven days of paying the rollover payment and a copy will be sent to the member within 30 days.
Rollovers and transfers are not treated as contributions in your fund.
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A proposed legislative change will capture rollovers to SMSFs as a designated service under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). This amendment will implement one of the government's Stronger Super measures and will require the transferring fund to comply with the obligations under the AML/CTF Act. The measure will apply to rollovers made on or after 1 July 2013.
This proposed change is not law as it has not been passed by parliament.
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Sections within Preparing to operate your fund
Last Modified: Wednesday, 22 May 2013