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  • Contributions

    The meaning of contributions

    The word ‘contribution’ is generally not defined in the law. The term's ordinary meaning is discussed in Taxation Ruling TR 2010/1 Income tax: superannuation contributions.

    The characteristics of an amount coming into your hands as a receiving provider will determine if it is a contribution. Generally, any amount that increases your fund's capital is a contribution; however not all of those amounts are required to be reported as part of your member information reporting to us. In addition, if an amount is derived or received as income, profit or gain from an investment, or is the realisation of an investment from your existing capital, it is not a contribution.

    The amount of a contribution

    The amount of a contribution is the gross amount originally contributed without deductions of tax, fees or other amounts. You may need to calculate the market value in some cases – for example, in relation to in specie contributions.

    Always report the full amount of the contribution that was originally made for the member. When reporting contributions, ensure that your reporting procedures do not reduce the actual amount of a contribution by any:

    • fees, taxes and investment losses that may reduce an account balance below what was originally contributed
    • contributions rolled over, transferred or allotted to a spouse under a contributions splitting arrangement
    • super benefits paid to the member
    • contributions paid out to the member under the hardship provisions
    • amounts released in accordance with a release authority.

    If you return a contribution in restitution of a mistake of law or fact, you should not report it to us, unless otherwise advised. If you have already reported it, you will need to correct your reporting.

    See also:

    The income year for which a contribution is reported

    Report a contribution according to when the contribution was legally made not when it was allocated. Do this regardless of the intentions of either the member or their employer. A contribution is generally regarded as made when it is received by you, not when a member or employer tells you it was made.

    Contributions received by you (made) on or before 30 June of a financial year but not allocated to the member’s account until the next financial year, should be reported as being made in the earlier year. Conversely, where a member attempts to make a contribution on 30 June but it is not received by you until July, the contribution is considered made in the later year, on the day it was received by you.

    If you are applying Taxation Determination TD 2013/22: Income tax: 'concessional contributions' - allocation of a superannuation contribution with effect from a day in the financial year after the financial year in which the contribution was made to the reporting of contributions, note that the ATO’s administrative assumption is that contributions are always made and allocated in the same year; therefore affected members may need to bring their circumstances to the ATO’s attention when this assumption does not apply.

    TD 2013/22 is not considered to apply as a broad brush approach for a provider to take for all of its members; it is used on a case by case basis which requires the same or similar circumstances as discussed in the determination. Applying this determination may require additional notification from you or an objection from the member to an impacted assessment of excess contributions tax (for 2012-13 and earlier financial years) or an income tax assessment that includes excess concessional contributions in their assessable income (for 2013-14 and later financial years).

    Find out about:

    • TR 2010/1 Income tax: superannuation contributions

    See also:

    • TD 2013/22 Income tax: 'concessional contributions' - allocation of a superannuation contribution with effect from a day in the financial year after the financial year in which the contribution was made

    Example 1

    As part of a salary sacrifice arrangement, Austin's employer made a contribution for him of $10,000 on 29 June 2016. The contribution was received into his fund's bank account on the same date; however the contribution was not allocated to an account for Austin until 1 July 2016. The contribution was correctly recorded as being made on 29 June 2016 and was reported as an employer contribution for Austin in respect of the 2015–16 financial year.

    Even if, for some other legal or practical purpose, the contribution is recognised in a different year, for member contribution reporting purposes the contribution should be attributed to the year it was made (received by the provider). See scenario 2 for when a contribution may be legally recognised in another year than it was reported.

    The period in which a contribution was intended to be made by the member or an employer does not affect when it was actually made. In this regard, you have no discretion in how you report the contribution.

    End of example

     

    Example 2

    Melanie had arranged for her employer, Wild Villas, to make regular personal contributions during the year totalling $1,000, to allow her to take advantage of the maximum super co-contribution. The contributions were made by after-tax payroll deductions paid monthly to her fund along with her employer contributions. Melanie's last monthly pay for the year was on 23 June 2017 and for that pay the Wild Villas sent $83 (personal) and $400 (employer) to the fund. Her payments were part of a large cheque that covered contributions for all Wild Villas employees that was dated 28 June 2017 and mailed the next day. The cheque was received by the fund on 3 July 2017.

    The fund should report for Melanie that both the $400 and the $83 were contributed in the 2017–18 financial year. Wild Villas had satisfied its super guarantee obligations for Melanie for the 2016–17 financial year as the contribution was made by 28 July 2017.

    Melanie asked the fund to re-report the $83 and treat the contribution as being made in the year it was intended for, but the fund correctly refused to do so, referring Melanie to the ATO's ruling TR 2010/1. She was unfortunately not entitled to the full co-contribution for the 2016–17 financial year. However, the contribution did count towards her co-contributions entitlement for the 2017–18 financial year.

    End of example

    Acceptance of contributions

    You may only accept contributions in accordance with regulation 7.04 of the Superannuation Industry Supervision Regulations 1994 (SISR). Circumstances in which you cannot accept certain contributions include (but are not limited to) situations where:

    • the member is over a certain age
    • the member has not quoted their tax file number (TFN) to you.

    If a contribution is inconsistent with regulation 7.04 of the SISR, you should not accept it. If you do accept the contribution in error, you are required to return it within 30 days of becoming aware that you should not have accepted it. Failure to comply with the time limit does not affect your legal obligation to return the contributions. An exception to this rule is if the member has failed to quote their TFN and subsequently quotes their TFN, making the contribution consistent with the regulation.

    The 30-day limit is a period of grace for you to remove the contributions from the super system without breaching the payment or contribution rules.

    Returning contributions under regulation 7.04 of the SISR may have implications for contributions reporting.

    For more information about the ATO's administrative stance on returning contributions after 30 days, refer to:

    • ATO ID 2009/29 Superannuation Contributions: return of contribution by self-managed superannuation fund – after 30 day time limit.

    Reporting member TFNs

    You are obliged to report a member's TFN where you have this information. A member's TFN is central to the correct calculation of their entitlement to:

    • super co-contributions
    • low income super contribution (LISC)
    • low income super tax offset (LISTO)
    • the assessment of any liability for excess contributions
    • Division 293 tax.

    If you do not have a member’s TFN, you:

    • will not be able to accept certain member contributions
    • may be liable for additional income tax (32% on top of the 15% tax you already paid) on assessable contributions, such as employer contributions (including salary sacrifice contributions).

    Report only valid member TFNs

    When reporting super member information to us, if you know the TFN is an exemption code rather than the member's valid TFN you must not report it. Exemption codes, such as 444 444 444, must not be reported in super member information statements. Their purpose is related to an exemption from withholding tax on interest and other investment income by banks and other investment bodies. More information can be found regarding exemption codes on Claiming an exemption from quoting a TFN for savings accounts and investments.

    If your member or their employer quotes a number to you that you know is not the valid TFN of the member, you should treat the member as not having quoted a TFN. You should attempt to obtain the correct number from them. If they do not give you their valid TFN and you are reporting an employer contribution, zero-fill the member TFN field to indicate that no member TFN was provided. Regulation 7.04(2) of the SISR states that you may not accept member contributions in these circumstances and therefore should not be reporting those contributions without a TFN.

    Example

    In May 2013, Brunswick Super Fund reviewed the TFNs it held for all its members, checking for one or more members with the same TFN. It found that it held exemption codes for 90 of its members. Brunswick Super Fund wrote letters to these members in June 2013 seeking their correct TFN and followed up with further contact as needed.

    By August 2013, 85 of the members contacted had responded with valid TFNs. For the five remaining members, Brunswick Super Funder reported no TFN (by zero-filling the member TFN field) in October 2013.

    For accumulation members in receipt of contributions, Brunswick Super Fund also returned any member contributions and super co-contributions received since 1 July 2007 (when the SISR was amended to prohibit a fund from accepting member contributions where a TFN is not quoted). Brunswick Super Fund also applied additional tax to employer contributions being made for the members.

    End of example

    Release authority and contributions

    Actioning a release authority must have no impact on the contributions you report (or on any contributions tax you applied to the member account when the contributions were made).

    The release authority does not impact contributions reporting for a member (or whether the contributions are considered assessable contributions for the purposes of your fund's income tax liability). When you receive a valid release authority, the member has satisfied a condition of release. You are authorised to release a benefit but not to refund contributions. The contributions that gave rise to an actual or potential liability to excess contributions tax are past transactions that are unchanged by application of the release authority.

    You must ensure that your systems do not trigger a re-report when you action a release authority.

    Classifying transactions

    When you receive a contribution or report an event, you should determine what type of contribution or event it is to ensure you report it correctly.

    How you classify the contribution in your reporting will depend on:

    • where the contribution has come from or how the event originated
    • the information provided by the contributor at the time of the contribution or event
    • the decisions you make about how it will be treated by you.

    When you accept a contribution, you need to collect information that will help you to correctly determine what type of amount it is. Generally, you should be able to answer the following questions for each contribution:

    • Who is the contribution for?
    • Who made the contribution?
    • What is the contributor's relationship with the member for whom the contribution was made (that is, are they the member themselves, the member's employer, the member's spouse or another third party – such as other family and friends)?
    • What was the purpose of the contribution?
    • Did the contributor provide a valid notice of election to treat the contribution in a particular way?

    Use the information you collect, the MATS business implementation guide (MATS BIG) and this protocol to help you correctly classify and report contributions and events. An explanation of each field, which adds to and supports the explanations given in the MATS BIG, is provided in this protocol.

    We use the contributions information you and other providers report to us as well as deduction information from your members’ tax returns to determine which contributions are:

    • eligible personal contributions so we can determine super co-contribution entitlement and eligibility for deductions or schemes – eg First Home Super Saver Scheme (FHSSS)
    • concessional contributions so we can determine LISC/LISTO entitlement for the financial year, and assess member tax liabilities in relation to the concessional contributions cap and Division 293
    • non-concessional contributions so we can assess member tax liabilities and eligibility for deductions or schemes.

    See also:

    Insurance premiums, paid by members or their employers, are contributions

    Insurance premiums paid to you are contributions. If they are paid by the member, they are considered to be personal contributions. If they are paid by the member’s employer (whether directly to the insurer or to you) they are considered employer contributions. This is true in all circumstances, including for risk-only or insurance-only policies where the super benefit afforded provides cover for death, disability or sickness only (that is, contributions are not accumulated in an account for the benefit of the member). The relevant field to report these is specified further in the protocol.

    If your liabilities, such as insurance premiums, are paid for by employers or other third parties, you have an obligation to record and report them as contributions attributable to the relevant members.

    Your members may be unaware that contributions of this nature are being made for them and may inadvertently exceed the contributions caps. Consider bringing this issue to the attention of your members and associated employers and third parties so that they are able to manage their contributions in an informed way.

    See also:

    • TR 2010/1 Income tax: superannuation contributions

    Contributions from an employer that are not employer contributions

    The following are contributions made by an employer from an employee's after-tax take-home pay and thus need to be classified as personal contributed amounts where:

    • the employer has an obligation to make such contributions and the employee has no choice (for example, under the rules of an employer-sponsored super fund or the rules of a defined benefit scheme)
    • the employer is voluntarily directed to make such contributions by the employee (for example, under arrangements authorising a regular pay-roll deduction).

    Contributions for a spouse of the employer or for a child employee who is under 18

    Employer contributions should be reported at one of the Employer contributions fields, if they are:

    • contributions made by an employer for the employer’s spouse - you should not report these at the Spouse contributions field unless the employer is acting in their capacity as the spouse of the member rather than in their capacity as an employer
    • contributions made by an employer in respect of a child employee under 18 years of age - you should not report these at the Child contributions field unless the employer is acting in their capacity as a relative or friend rather than in their capacity as an employer.

    Special rules for defined benefits funds (DBF) and constitutionally protected funds (CPF)

    As well as reporting any actual employer contributions paid in relation to a member's accumulation interest, if you are a DBF, defined benefit scheme or a CPF, you may need to report contributions information in relation to a member's defined benefit interest - these are not reported at the Employer contributions fields.

    These contributions are referred to as notional taxed contributions and defined benefit contributions. Both contribution types are generally intended to reflect what an employer would have needed to contribute in that year to fund the member’s expected final benefit. However, they are calculated differently and should not be confused with each other. You should determine the amount for each member with the advice of an actuary.

    See also:

    Employer contributions

    Generally, super contributions made by your member’s employer are included in one of the Employer contributions fields. However, this is not always the case, and you will need to implement systems and processes to distinguish between:

    • employer contributions made by an employer
    • personal contributions made by an employer on behalf of their employee.

    You may also have a duty to ensure this distinction is understood and properly applied by your members and by their employers when providing information to you. For example, you may need to work with an employer to correct information where the employer is incorrectly characterising members’ salary sacrifice contributions as personal contributions.

    Employer superannuation guarantee

    These are:

    • contributions made by an employer specifically to meet super guarantee requirements under the Superannuation Guarantee Administration Act 1992
    • any super guarantee charge we contributed for a member – these are paid in lieu of contributions an employer failed to provide for the member
    • any amounts we contributed for a member by transfer from their super holding accounts (SHA) special account, but only to the extent that they are characterised as a taxable component. The taxable component represents employer contributions (such as super guarantee charge) that we have been holding in the SHA special account for the member.

    Reporting contributions from the ATO

    Historically, providers have reported all contributions to the ATO including those that have been sent to them via the ATO. From 2018–19 financial year onwards some contributions which are sent from the ATO to you no longer need to be reported such as government co-contributions, LISC/LISTO. The contributions received by you from the ATO that are required to be reported from 2018–19 financial year onwards are only those listed above to be included at the employer super guarantee field.

    Employer salary sacrifice

    These contributions are made by the employer as a result of a salary sacrifice arrangement, where the member agrees to forgo part of their before-tax salary or wage in return for their employer providing a super benefit of a similar value.

    These contributions should not be confused with compulsory member contributions made pre-tax towards funding a defined benefit where they are included in the actuarial calculation of notional taxed contributions and defined benefit contributions.

    See also:

    Employer award

    These are contributions paid over and above the super guarantee requirements under obligations imposed by industrial agreements, awards, trust deeds or governing rules.

    These may include amounts paid in by an employer from a member's pre-tax salary in order to make mandated personal contributions to an accumulation scheme (where the member's voluntary component would be reported as Employer salary sacrifice and the mandatory component reported in this field as Employer award), or under a Commonwealth, state or territory law governing the super entitlements of public sector employees.

    Employer voluntary

    These are contributions made to fund super retirement benefits for members as part of a remuneration package that may exceed the minimum legal requirements imposed by industrial agreements, awards, trust deeds or governing rules.

    Alternatively they can be to fund costs such as insurance premiums paid in respect of the member where they are not mandated in accordance with Part 5 of the Superannuation Industry (Supervision) Regulations 1994.

    The type of employer contributions reported may have an impact on your member's liability to certain taxes (for example Division 293) or their availability to participate in certain schemes (for example the FHSSS where only the salary sacrificed employer contributions would be available for release).

    It's important for employers to correctly characterise each contribution using the Employer contribution categories when they send them to you and for you to report them accordingly.

    Example 1 – Insurance premiums paid by the employer

    Chef Pty Ltd sponsors a super fund for its employees called Chef Super Fund. Colin is a senior employee of the company and a member of the super fund.

    The trustees of the fund insure the lives of the fund’s members, including Colin’s and the trustees are the policy holders. The insurance is to fund super benefits payable upon Colin’s death or permanent incapacity.

    Chef Pty Ltd as employer sponsor complies with a certified agreement to pay the fund’s annual life insurance premiums for Colin of $1,200 and does so on 1 June 2019. The insurance premium is over and above the normal SG obligations for Chef Pty Ltd.

    When Chef Super Fund reports for the 2018–19 financial year, it reports the $1,200 paid for Colin at the Employer – award field. It has already reported a total of $4,900 at the Employer – super guarantee field throughout the year and a total of $20,000 at the Employer – salary sacrifice field that Colin has salary sacrificed through a regular payroll deduction.

    Chef Super Fund did not make Colin aware of the effect of these premiums on his contributions. Colin had made a salary sacrifice agreement with Chef Pty Ltd, which he believed kept his employer contributions from exceeding his concessional contributions cap of $25,000. Colin was unaware that he had exceeded the cap until he received a letter from us about his potential liability for excess contributions tax.

    Note that there may be instances where an employer reports these insurance payments at the 'Employer - voluntary' field where the payment or reimbursement of insurance premiums paid by the employer are made on a voluntary basis and are not mandated.

    Providers should allocate Employer contributions to the relevant category based on information provided by the employer.

    End of example

    Non-employer contributions

    Personal contributions

    Personal contributions are generally those made by a member for their own benefit from their after-tax monies including where a member has claimed a personal tax deduction. personal contributions can also be made by their employer on their behalf.

    Contributions that are personal contributions

    Both concessional and non-concessional contributions made by the member are reported here.

    There are special rules and concessions that apply to some personal contributions which are reported separately in order for us to properly administer them.

    See also:

    The personal contributions to which each of these concessions apply are reported at the applicable field, with only the remainder being reported at the personal contributions field.

    If a member seeks to have a concession applied to a contribution and you assess that the concession is not applicable, the contribution should be reported as a personal contribution. For example, if a contribution is made with a capital gains tax election that the provider determines is invalid because the election was given to the provider after the contribution was made, the contribution should be reported at the personal contributions field and not at the capital gains tax cap election amounts field.

    Ensure your processes and systems recognise how the personal contributions field interacts with these other separately reported personal contributions.

    Transfers from non-complying funds

    A transfer from a non-complying fund is a member contribution. The entire amount should be included at the Personal contributions field. The amount should not be reduced or varied by any fees, taxes or interest paid. Note that different rules apply to transfer from foreign funds.

    See also:

    Insurance premiums paid by a member

    Insurance premiums paid to you by the member are personal contributions and are to be reported as Personal contributions.

    Some of your members may have an entitlement to super co-contributions arising from insurance premium payments. However, even though you may not be able to accept the super co-contributions, these super co-contributions could be paid to another provider.

    Example

    Secure Life Super has a range of risk-only or insurance-only policies where members pay an annual premium and the fund provides cover for death and disability. Stan is one of these members and paid a premium of $1,000 in 2014–15 financial year and again in 2015–16 financial year. Secure Life Super reported for policies with accumulation accounts but not for its risk-only policies. Stan was therefore not made aware that the premium payments counted as personal contributions.

    In late 2017, the ATO conducted a routine audit of Secure Life Super. It identified that the fund had not lodged for a large proportion of its membership. The fund was found not to be compliant with its reporting obligations on this issue. Following the audit, Secure Life Super reported the outstanding premium amounts as personal contributions in the relevant years to correct its error. It also reported that super co-contributions cannot be accepted by the fund for the risk-only accounts.

    A failure to lodge administrative penalty was imposed on Secure Life Super for the late reporting.

    It was determined that Stan was entitled to super co-contributions for 2014–15 and 2015–16 financial years. As the fund had reported that super co-contributions cannot be accepted, we ask Stan to nominate another super fund to which the entitlements will be paid.

    End of example

    Capital gains tax cap election amounts

    Capital gains tax cap election amounts include:

    • small business retirement exemption amounts
    • small business 15-year exemption amounts

    Whether a person is eligible to make these elections is a complex matter on which you will not be able to advise members. You should urge your members to seek professional advice before making contributions subject to these elections.

    These fields are used for reporting personal contributions that a member validly elects to exclude from counting toward their non-concessional cap using the capital gains tax small business concessions.

    You should report contributions in these fields if you received a valid election (either before or at the same time as the contributions were made). You are obliged to check the validity of this election but only to the extent that it is possible and reasonable to do so. The following are examples of questions about the validity of the election that we expect you to be routinely asking to determine validity:

    • Was the election received by you before or on the date the contribution was made?
    • Was the election given in respect of contributions made by the member and not in respect of contributions made by another person, such as an employer?
    • Was the election made in the approved form?
    • Do you hold the member's TFN?

    If you become aware that a CGT cap election was not valid after you have reported the contribution, you will need to re-report the contributions as personal contributions. You may become aware of this if either the member or we advise you that this is the case or if you review your previous reporting.

    The legislation does not stipulate what action can be taken in the case where you have received a valid election and subsequently find that it contained errors.

    Generally, our position is that you can substitute the CGT exemption amount originally elected with the actual exemption amount advised on a subsequent election, treating the subsequent election as an amendment to the original election.

    An approach for you to deal with this situation is to treat the form already given as if it were ineffective on the grounds that the particulars provided on the form are incorrect, and to accept another form as an amendment to the original. This approach ensures that the timeframe required by the law to submit the form has been met.

    If you have already reported the contribution with an incorrect amount, you will also need to correct your reporting.

    See also:

    Election issues

    Late elections

    A late election is one made any time after the contribution to which it applies has been made. A late election is not effective, and the member's contribution should be reported at the Personal contributions field, not at either of the Capital gains tax election fields.

    This is not a matter where you have any discretion. You should refer members seeking to lodge late elections to us for advice.

    Retirement exemption elections in excess of $500,000

    Members are not permitted to exclude more than $500,000 under the small business retirement exemption amount. If they elect to do so in error, you are not permitted to report amounts in excess of $500,000 at this field. The balance in excess of $500,000 must be reported at the Personal contributions field.

    Example

    In May 2018, with a personal contribution of $700,000, Adam gave a capital gains tax cap election for a small business retirement exemption to TOP Super Fund that claimed an amount of $700,000 for the small business retirement exemption. Client service representatives from TOP Super Fund contacted Adam to advise him of his error and of the fact that TOP Super Fund cannot report more than $500,000 to the ATO as a CGT exemption. They suggested Adam seek professional advice about his eligibility to use an alternative exemption type and/or whether he would have an excess contributions tax liability. Adam said he already took professional advice and insisted the election was correct.

    In order to report correctly for Adam, in the approved form, TOP Super Fund reported $500,000 at the Small business retirement exemption field and $200,000 at the Personal contributions field.

    End of example
    Elections not in respect of personal contributions

    The capital gains tax election is to exclude personal contributions from the non-concessional contributions cap. It does not apply to any other type of contribution, such as contributions made by the member's employer, spouse, family and friends or business entities associated with the member.

    Elections not in the approved form

    The capital gains tax election must be made using the Capital gains tax cap election form (NAT 71161). This is the approved form for providing a Capital gains tax cap election. The form must be completed in full and signed by the member on or before the time of contribution.

    No TFN

    A personal contribution made with a capital gains tax election is a member contribution for the purposes of the contributions standards and so cannot be accepted if a valid TFN is not:

    • on the election form
    • already held by the provider.

    See also:

    • Regulation 7.04 of the SISR Acceptance of contributions - regulated superannuation funds

    Personal injury election/Structured settlement amount

    This field is used for reporting personal contributions that a member validly elects to exclude from counting toward their non-concessional cap as the contributions have arisen from a structured settlement or order for personal injuries.

    Include contributions at this field if you received a valid personal injury election with the contributions. You are obliged to check the validity of this election but only to the extent it is possible and reasonable to do so.

    The following are examples of questions about the validity of the election that we expect you to routinely check to determine its validity:

    • Was the election received by you before or on the date on which the contribution was made?
    • Was the election given in respect of contributions made by the member, or under the member's direction, and not for contributions made by another person, such as an employer?
    • Was the election made in the approved form?
    • Do you hold the member's TFN?

    A debit will arise in the member's transfer balance account for any structured settlement amount received and contributed towards their super interest.

    To be eligible, the contributions must arise from either:

    • a structured settlement payment
    • an order for a personal injury payment
    • a lump sum workers compensation payment
    • only applying to that part of these amounts that is compensation or damages for personal injury.

    The member must have made the contribution within 90 days (or a longer period as the Commissioner allows) of the later of:

    • the date the member received the personal injury payment
    • the date the member entered into an agreement for settlement of a personal injury
    • the date on which an order for a personal injury payment was made.

    For contributions made from 1 July 2007, you must have received a completed Contributions for personal injury election (NAT 71162) form from the member on or before the date on which the member made the contribution.

    You are not required to investigate these matters when you receive an election. However, if you are alerted to the fact that these eligibility requirements have not been met then you should treat the member's election as invalid and advise them that the amount will be reported to the ATO at the personal contributions field.

    Whether a person is eligible to make this election is a complex matter on which you will not be able to advise your members. You should urge your members to seek professional advice before making contributions subject to this election.

    You should not change your reporting at this field even if a member subsequently provides you with a notice of intention to claim a deduction for these amounts. The law allows a member to elect to deduct a personal injury/structured settlement contribution in the same way as they deduct other personal contributions That is, you do not adjust the personal contributions reported when you receive a notice of intent to claim a deduction when the amount has been reported at the personal contributions field - nor should you do so when it has been reported at the personal injury/structures settlement field.

    Election issues

    Late elections

    You should refer members seeking to lodge late elections to us for advice, since this is not a matter in which you have any discretion.

    Elections not in respect of personal contributions

    The personal injury election is to exclude personal contributions from the non-concessional contributions cap. It does not apply to any other type of contribution.

    Elections in the approved form

    This election must be made using the Contributions for personal injury (NAT 71162) form. This form is the only approved form. It must be completed in full and signed by the member or the member's legal representative either before or at the time of contribution.

    No TFN

    A personal contribution made with a personal injury election is a member contribution for the purposes of the contributions standards and so cannot be accepted if a valid TFN is not:

    • on the election form
    • already held by the provider.

    See also:

    • Regulation 7.04 of the SISR Acceptance of contributions - regulated superannuation funds

    Spouse contributions

    Contributions included at this field are:

    • contributions made by the member’s spouse
    • contributions made for a child where the spouse and child contributions have not been separated for reporting purposes

    See also:

    Contributions made by the member's spouse

    If a person advises that they are making a contribution for the benefit of a member in their capacity as the member’s spouse, then the contribution needs to be reported at this field.

    Spouse includes a person:

    • to whom the member is married (and is not separated from on a permanent basis)
    • with whom the member is in a relationship that is registered under certain state or territory laws (including registered same-sex relationships)
    • who lives with the member on a genuine domestic basis in a relationship as a couple (known as a de-facto couple and including same-sex couples).

    You should not include at this field contributions made by a spouse living separately and apart from the person on a permanent basis, even if the couple remains married. If a contribution is received for a member from a spouse who is living separately or former spouse, it is reported at other third party contributions.

    If the spouse of a member is also their employer, the contributions they make for the member must be reported according to the capacity in which they make a particular contribution. For example, contributions made in the capacity of an employer to meet super guarantee obligations will be reported as employer contributed amounts, while extra contributions made only because of their personal relationship as a couple will be reported as a spouse contribution.

    Child contributions

    Contributions made for a child means any contributions made for a member who was less than 18 years old at the time the contribution was made, excluding:

    • personal contributions made by the member themselves
    • employer contributions made by a person acting in their capacity as the employer of the member (even if they are also a parent or relative of the member).

    Contributions made by a parent of the member are not reported as contributions made for a child unless the member is less than 18 years old. This is true regardless of whether the child is financially dependent upon the parent or not. If the child is over 18 years old, contributions made by a parent should be reported at the field other third party contributions.

    Other third party contributions

    Other third party contributions are not personal contributions or employer contributions and do not fit the other special categories.

    You should include at this field contributions made by third party contributors, including:

    • contributions made by the member’s former spouse
    • contributions made by a person to whom the member is married but is now living separately and apart from on a permanent basis
    • contributions made by a parent, child or other relative of the member, where the member is over 18 years old
    • contributions made by a friend of the member
    • policy entitlements paid by insurance companies in the form of super contributions
    • statutory compensation paid by government agencies in the form of super contributions
    • contributions made by a person or organisation making a contribution out of charity, by way of a gift to the member
    • contributions made by the employer of the member's spouse or other relative
    • contributions made by the ATO or other government agencies to compensate members for errors in their administration of the law.

    A good way to distinguish between contributions made by third party contributors is to consider the following distinction:

    • contributions made by a third party on their own initiative or obligation, for the benefit of a member should be reported as other third party contributions
    • contributions made by a third party under the member's direction or instruction, dealing with monies to which the member would otherwise have been personally entitled, should be reported as personal contributions.

    You should take reasonable steps to ensure you collect correct information from your members when these contributions are made.

    Make sure your practices and procedures for the collection of information when contributions are made don't routinely characterise all contributions made by third party contributors as personal contributions.

    Example 1 – personal contribution made by a third party

    Quynh's grandmother died and Quynh inherited a share of her house. The trustee of the estate sold the house and distributed the proceeds to the beneficiaries. In accordance with Quynh's instructions, the trustee paid $120,000 into Quynh's super fund. Based on the information Quynh provided about the contribution, the super fund reported it as a personal contribution.

    End of example

     

    Example 2 – other third party contribution made as a gift

    When Paul's grandfather died, his grandmother sold the family home and decided to distribute the proceeds to her grandchildren. She was concerned they would squander her gift, so decided to contribute each share to each grandchild's super fund. Paul gave her his super fund's details, and she contributed $120,000 into his super fund for him. The super fund correctly reported the contribution as an Other third party contribution.

    End of example

     

    Example 3 – other third party contribution made under an insurance obligation

    Tom's employer did not offer generous leave conditions, so Tom took out income replacement insurance. When Tom was very ill for eight months, he was forced to use leave without pay for some of the time. Under his insurance policy, regular payments were made to him to replace his salary during that time. In addition, the insurance company made payments directly to Tom's super fund in lieu of the contributions his employer might have made for him had he not been on sick leave without pay. Tom's super fund correctly reported these contributions as other third party contributions.

    End of example

    Proceeds from primary residence disposal

    Also referred to as 'downsizer contributions'.

    This field is used for reporting contributions that an eligible member validly elects to exclude from counting toward their non-concessional cap as the contributions have arisen from the sale of an eligible residence in accordance with section 292–02 of the Income Tax Assessment Act 1997 (ITAA 1997).

    Whether a person is eligible to make downsizer contributions is a matter you will not be able to advise members. You should urge members to seek professional advice before making contributions.

    Proceeds from primary residence disposal are contributions which have been received from members who have sold their eligible residence, where the contract of sale was entered into on or after 1 July 2018 and meet the following criteria:

    • is 65 years of age or older (no maximum age limit applies)
    • satisfy both an ownership test and a main residence test
    • have self-assessed eligibility
    • have not claimed a personal super contribution deduction for the applicable contribution
    • have made the contribution within 90 days from the time the change of ownership occurs (unless the Commissioner has granted an extension).

    The maximum amount that an individual can contribute to all providers from the sale of the one home is the lesser of:

    • $300,000
    • the proceeds of the sale of the home, less any other downsizer contributions that have been made by the individual or a spouse.

    Elections in the approved form

    This election must be made using the downsizer contribution form. This form is the only approved form. If you provide your own form for your members, it must include all the information that the approved form contains. It must be completed in full and signed by the member or the member's legal representative either before or at the time of contribution.

    • Members making multiple contributions from the sale of the one main residence must complete a separate election for each contribution.
    • You are obliged to check the validity of this election but only to the extent that it is possible and reasonable to do so.

    The following are examples of questions about the validity of the election that we expect you to be routinely asking to determine its validity:

    • Is the member 65 years or older?
    • Was the election received by you before or on the date on which the contribution was made?
    • Was the election given in respect of contributions made by the member, or under the member's direction, and not for contributions made by another person, such as an employer?
    • Was the election made in the approved form?
    • Do you hold the member's TFN?

    Members may choose to make multiple contributions from the sale of one primary residence up to the maximum that they can contribute.

    Late elections

    A late election is one made any time after the contribution it applies to has been made (unless additional time has been allowed by the Commissioner). A late election is not effective, and the member's contribution should be reported at personal contributions not at proceeds from primary residence disposal.

    This is not a matter in which you have any discretion. You should refer members seeking to lodge late elections to the ATO for advice.

    No TFN

    A downsizer contribution made with a downsizer election is a member contribution for the purposes of the contributions standards and so cannot be accepted if a valid TFN is not:

    • on the election form
    • already held by the provider.

    See also:

    • Regulation 7.04 of the SISR Acceptance of contributions - regulated superannuation funds
    Downsizer contribution not eligible

    Where a downsizer contribution is found to be ineligible, the ATO will advise both you and the member of the action that will be taken.

    We anticipate further guidance on ineligible contributions once we have received additional legal advice.

    Directed termination payments

    The concessional treatment of directed termination payments was a transitional measure that ended on 30 June 2012.

    If you receive payments from employers after this date that purport to be directed termination payments, report the entire payment as a personal contribution.

    If you contact the member or their employer and decide the contribution was made in error (that is, in the belief that directed termination payments could still be made) you may alternatively decide not to accept the contribution and will not report it.

    Amounts transferred from foreign funds

    A member can transfer their interest or entitlement in a foreign fund to an Australian superannuation fund .They may pay some income tax on this transfer but only on the applicable fund earnings. The applicable fund earnings are, in general terms, the earnings on the member’s foreign super interest that accrued since they became an Australian resident or terminated their foreign employment until the transfer takes place. If they complete the transfer within six months of becoming an Australian resident or terminating foreign employment as an Australian resident, the applicable fund earnings are always nil.

    A member can elect to include the applicable fund earnings in the assessable income of the Australian superannuation fund as an alternative to paying income tax on the amount themselves. They make this choice by giving you the form Choice to have your Australian fund pay tax on a foreign super transfer (NAT 11724) or by providing the same information in a form you give them. This is the only means of making this choice.

    Your reporting obligations

    All amounts received from a foreign fund transfer (other than a KiwiSaver scheme) are contributions (according to the ordinary meaning discussed in taxation ruling TR2010/1) and must be reported.

    There are three possible components for other foreign fund transfers which are not KiwiSaver schemes:

    • applicable fund earnings (elected)
    • excess foreign fund amount
    • non-assessable foreign fund amount.
    Applicable fund earnings (elected)

    This is the amount the member has chosen to include in the assessable income of their provider (the amount shown at section D, question 17 on the Choice to have your Australian fund pay tax on a foreign super transfer (NAT 11724). You should report this field as nil if the member did not make this choice.

    Excess foreign fund amount

    This is the difference between:

    • the amount in the foreign fund vested in the member at the time the foreign transfer occurs
    • the amount actually transferred to the Australian superannuation fund by the foreign fund.

    This difference can arise, for example, when a foreign employer allocates an additional discretionary payment to the member as a golden handshake or in recognition of years of service.

    Generally, foreign fund earnings are regarded as vested in the member, even if they are not calculated and applied to the member’s account until the transfer occurs and even if earnings won’t be applied to other members' accounts until a later date.

    You should be careful not to confuse the excess foreign fund amount with the amount the member chooses to include in your fund’s assessable income.

    Non-assessable foreign fund amounts

    This is the entire foreign fund transfer amount less:

    • any amounts included in the field excess foreign fund amount
    • any amounts included in the field applicable fund earnings (elected)
    • this amount often makes up most of a foreign fund transfer.

    Transfers from New Zealand KiwiSaver Schemes

    Transfers from KiwiSaver Schemes under trans-Tasman portability arrangements are not treated the same as other foreign fund transfers. There are different rules for deciding which part of the transfer should be included.

    There are three possible components of a transfer from a KiwiSaver Scheme:

    • any amounts that are Australian sourced amounts returning to Australia (that have previously been reported by an Australian superannuation fund) should not be reported
    • any amounts that are New Zealand-sourced amounts that were previously transferred to Australia and are now returning from New Zealand should not be reported as these have previously been reported by an Australian superannuation fund
    • the remainder of the KiwiSaver tax-free transferred amount should be reported at non-assessable foreign fund amounts. This will be treated as a non-concessional contribution and count towards the member’s non-concessional cap.

    You should not accept these transfers from New Zealand unless you have built systems and processes to allow you to do so, including to:

    • store details of KiwiSaver tax-free components, and pass these details to other providers with a rollover
    • comply with the regulatory rules that apply to these components (such as no rollovers to SMSFs and preservation of New Zealand-sourced amounts until age 65)
    • comply with the tax rules that apply when these amounts are paid to the member as a benefit
    • report the KiwiSaver tax-free amount when first transferred from New Zealand.

    Transfers from reserves

    Generally, all amounts transferred or allocated from reserves should be reported as either assessable or non-assessable amounts. The meaning of assessable and non-assessable is provided within the ordinary meaning of contributions (as provided in taxation ruling TR 2010/1).

    Examples of where allocations from reserves are generally not reported as assessable amounts include:

    • amounts allocated to all members, or to a class of members to which the reserve relates, on a fair and reasonable basis
    • amounts allocated for the sole purpose of discharging super income stream liabilities that are currently payable
    • allocations following the commutation of a pension, where the amount in the reserve is allocated to a member who is the primary beneficiary of the pension and it is used to support another income stream for that member.

    Example 1 –transfer from reserves not reported

    Wellington Super had accumulated earnings in an investment reserve. On 1 May 2013, the trustees distributed the balance of the reserve to members to whom the reserve related in proportion to their interest in the fund on that day. In the 2012–13 financial year, Wellington Super reported these amounts in the MCS field all contributions received for the current year and did not report any amounts as either assessable or non-assessable transfers from reserve.

    For 2018-19 financial year onwards these distributed earnings amounts would not be reported to the ATO in MATS.

    End of example

     

    Example 2 –transfer from reserves reported as non-assessable

    Wellington Super accepted member contributions into a reserve. These amounts are then allocated to the member within 28 days of the end of the month. These amounts are not considered assessable contributions for the purposes of the fund's income tax liability and are reported at the field Transfers from reserves - non-assessable.

    End of example

     

    Example 3 –transfer from reserves reported as assessable

    Wellington Super had accumulated employer contributions into reserve.

    These amounts were then allocated to the member within 28 days of the end of the month. The amounts are considered assessable contributions for the purposes of the fund's income tax liability and Wellington Super reported them at the field transfers from reserves – assessable.

    End of example

    Allocations in lieu of employer contributions

    An allocation from a reserve in lieu of an employer contribution is generally reported as an assessable amount (and is not reported as an employer contribution). You must gross-up the amount to be reported by 1.176 to reflect the employer contribution (before 15% tax) that would have been required to fund the amount actually allocated. However, this grossing up method results in a reporting requirement that does not precisely reflect the equivalent contribution that an employer would have made.

    Application of these regulations is a complex matter. You should obtain advice from suitably qualified people, either in-house or externally.

    Example

    A trustee of a fund allocates $8,500 from the fund's reserves to a member’s account, being 15% less than the $10,000 that the member's employer might otherwise have contributed. The fund reports for the member a transferred from reserves amount of $9,996 ($8,500 x 1.176), not the amount of the allocation ($8,500) and not precisely the amount of the equivalent employer contribution ($10,000).

    End of example

    See also:

    Other concessional and other non-concessional contributions

    Other concessional and non-concessional contributions received for the member but cannot be reported in any other fields may include contributions (according to the ordinary meaning in taxation ruling TR 2010/1) that are not reported elsewhere.

    At the time of writing this document there are no other amounts that we consider fit these categories and providers should enquire via SuperCRT before using these fields.

    The protocol and MATS BIG should be read carefully and these fields used only when there is genuinely no other fields applicable.

    See also:

    Personal superannuation contribution deduction – notice of intent to claim (NOI)

    Eligible members may provide you with a form notifying you of their intention to claim an income tax deduction in their personal tax return for some or all of the personal contributions they made on their own behalf during a financial year.

    Reporting of claimed amounts

    A personal contribution does not cease to be a personal contribution when the member notifies you of their intention to claim a deduction for the contribution with a notice under section 290-170 of the ITAA 1997.

    Even though the income tax consequences have changed for the fund and for the member, you do not change how you categorise the contribution. You should continue to report the contribution as a member contribution at either the Personal contributions field or the Personal Injury election/Structured settlement field if applicable.

    While you will need to distinguish concessional and non-concessional personal contributions for other purposes (for relevant income tax obligations and for calculation of member taxable and tax-free components), you don't need to do so for reporting member transactions. As you may receive a notice of intent to deduct personal contributions long after the end of the financial year, it is often impossible for you to achieve this characterisation at the time you report the contribution. Because of these timing difficulties, the ATO will characterise reported personal contributions as either concessional or non-concessional, depending on whether we allow a deduction for those contributions when the member lodges their tax return.

    Personal contributions should not be categorised as employer contributions, no matter how they are treated for income tax purposes by the member or by you.

    If you report all concessional contributions as employer contributions regardless of their actual nature you are not complying with your legal obligations and risk incurring penalties. If personal contributions are incorrectly reported as employer contributions (or other types of contributions) your members may:

    • miss out on co-contributions entitlements
    • be treated incorrectly as having exceeded their concessional contributions cap
    • not be assessed when they have exceeded the non-concessional cap.

    Reporting of a notice of intent to claim a deduction

    • In addition to ensuring correct reporting of personal contributions amounts, you are required to notify us of certain details pertaining to a member's notice of intent that has been received and acknowledged as valid by you. These details and the specifications regarding how they should be reported are contained in the MATS BIG.

    See also:

    Reporting amendments

    Refer to:

      Last modified: 01 Aug 2018QC 56350