• Returning contributions

    For your self-managed super fund (SMSF) to receive concessional tax treatment, you must elect to be a regulated super fund. Your fund will be a complying fund if you comply with the provisions and regulations of the:

    • Superannuation Industry (Supervision) Act 1993 (SIS Act)
    • Superannuation Industry (Supervision) Regulations 1994 (SISR).

    When you receive an amount from or on behalf of your member, you can only pay out an amount if:

    • you cannot accept the amount under the SISR and you need to return all or part of the amount back to the contributor
    • you are paying a benefit to or for the member because the member has met a condition of release
    • the return is authorised by the principles of restitution for mistake, which unwind the original contribution.

    You don't report a contribution if it has been returned to the contributor in restitution for a 'mistake'. You have a 30-day period of grace to remove the contributions from the super system without breaching the preservation or contribution rules. Once this time expires, you will not be able to take advantage of the defence provided by subregulation 7.04(5) and will be in breach of the rules.

    You need to report all other contributions that have been returned to the member or contributor.

    You need to know what contributions you can and can't accept and when to pay benefits. If you get it wrong, your fund can be made non-complying. This will generally mean that all assets and income of the fund will be taxed at the highest marginal rate in the year the fund is made non-complying. Income continues to be taxed at the highest rate while the fund remains non-complying.

    See also:

    • ATO ID 2010/104 Superannuation – Excess contributions tax: restitution of a 'mistaken' contribution

    What you have to do

    Before accepting a contribution, make sure you are allowed to accept that type of contribution for the member. You generally have 30 days from the date you receive the amount to determine whether you can accept it.

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      Last modified: 18 May 2017QC 21807