Classifying transactions
When you receive a contribution or report an event, you should determine what type 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 contribution 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 Member Account Transaction Service business implementation guide (MATS BIG)External Link 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, for example, First Home Super Saver Scheme (FHSS)
- concessional contributions – so we can determine low income super amount entitlements 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.
Insurance premiums 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.
Contributions made by an employer that are personal contributions
In some circumstances, contributions made by an employer from an employee's after-tax take-home pay need to be classified as personal contributions. These include 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 spouses or children
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 as an employer
- contributions made by an employer for 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 as an employer.
Defined benefits and constitutionally protected funds
As well as reporting any actual employer contributions paid in relation to a member's accumulation interest, if you are a defined benefit scheme or a constitutionally protected fund, you may need to report contributions in relation to a member's defined benefit interest. These contributions are referred to as notional taxed contributions and defined benefit contributions.
These are not reported at the Employer contributions fields, refer to the Annual obligations and balance amounts protocol.
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.