Restitution for mistake

Contributions generally cannot be returned to a member because:

• they regret making the contribution
• they or their agents made an error in their decision to contribute.

Contributions may only be refunded in circumstances tightly prescribed by legislation.

Contributions returned in accordance with the law of restitution don’t count towards the member's contributions cap. The fund must amend its reporting to account for returned contributions.

In circumstances where the law of restitution does not apply, a fund must continue to report the contributions that were received, even if they were returned.

While we will scrutinise these decisions, we recognise there are many circumstances where a decision to amend will be entirely correct. A failure to amend would be a failure to report correctly.

See also

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

Reporting contributions received

As an SMSF, you must report all contributions made for the member each financial year in the Self-managed superannuation fund annual return.

You must report the total contribution and not the contribution less any benefits paid to the member in the same year.

If your fund returns an amount as required by Regulation 7.04(4), the fund is taken to have never accepted the amount as a contribution and therefore doesn't need to report it. You have a 30-day period of grace to remove the contributions from the super system without breaching the preservation or contribution rules. After this period expires, you will not be able to take advantage of the defence provided by subregulation 7.04(5) of the SISR and will be in breach of the rules.

Contributions returned in accordance with the law of restitution don’t count towards the member's contributions cap. The fund may have to amend its reporting to account for returned contributions.

If your fund returns a contribution inconsistent with the law of restitution the fund must continue to report the contribution for the member, even if it was returned.

Next step

• Download the relevant Self-managed superannuation fund annual return