ATO Interpretative Decision
ATO ID 2008/90 (Withdrawn)
SuperannuationSuperannuation contributions: return of fund capped contributions by self-managed superannuation fund
FOI status: may be released
This ATO ID is withdrawn from the database as subregulations 7.04(3) and 7.04(7) of the Superannuation Industry (Supervision) Regulations 1994 (SISR) have been repealed with effect from 1 July 2017. Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of decisions for income years up to, and including, the 2016-17 income year.This document has changed over time. View its history.
Status of this decision: Decision withdrawn
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Is a trustee of a self-managed superannuation fund required by subregulations 7.04(3) and 7.04(4) of the Superannuation Industry Supervision Regulations 1994 (SISR) to return the whole of a fund-capped contribution to a contributor if it is greater than three times the amount of the non-concessional contributions cap for that financial year?
No. As the member was aged 64 or less on 1 July of the financial year the trustee is only required to return that part of the fund-capped contribution that exceeds three times the amount of the non-concessional contributions cap for the financial year.
[Had the member been aged 65 or more but less than 75 on 1 July of the financial year, the trustee would have been required to return that part of the fund-capped contribution that exceeds the non-concessional contributions cap for the financial year].
A person, aged 55 years is a member of his self-managed superannuation fund (ABC Fund). During the 2007-08 financial year the member made a contribution to ABC Fund by transferring an amount from his overseas bank account. After conversion to Australian dollars the amount of the contribution was $452,000. The full amount of the contribution was a non-concessional contribution.
The member, in his capacity as trustee of ABC Fund, has asked whether the fund has to return the full amount of the contribution or only $2,000, being the amount by which the contribution exceeds three times the non-concessional contributions cap.
Reasons for Decision
Subregulation 7.04(3) of the SISR provides that:
In addition to subregulation (1), the regulated superannuation fund must not accept any fund-capped contributions in a financial year in respect of a member that exceed:
A trustee of a self-managed superannuation fund should, before accepting a contribution for a member, consider if the contribution is a 'fund-capped contribution'. The meaning of 'fund-capped contributions' is given in subregulation 7.04(7) of the SISR. They are member contributions, as defined in subregulation 5.01(1) of the SISR, but exclude certain contributions - none of which apply in the current case.
In this case, the member is less than 64 on 1 July 2007. The ABC fund must not accept a fund-capped contribution for the member that exceeds three times the amount of the non-concessional contributions cap. For the 2007-08 financial year three times the amount of the non-concessional cap is $450,000. For the purposes of this regulation, the $450,000 is not reduced by other non-concessional contributions made by the member to the ABC Fund (or any other fund) in that financial year or earlier financial years.
Subregulation 7.04(4) of the SISR provides that:
If a regulated superannuation fund receives an amount that is inconsistent with subregulation ... (3):
It has been suggested that subregulation 7.04(4) of the SISR requires the full amount of a fund-capped contribution that exceeds the relevant amount to be returned to the entity or person who made the contribution. However, it is only the amount in excess of the relevant amount that has been received in a manner that is inconsistent with subregulation 7.04(3) of the SISR.
Item 80 of the Explanatory Statement to the Superannuation Industry (Supervision) Amendment Regulation 2007 (No.1) supports the view that it is only the amount in excess of the relevant amount that is required to be returned. It states:
To help prevent a person from inadvertently contributing more than the non-concessional contributions cap, new subregulation 7.04(3) provides that superannuation funds will be required to return an amount of certain member contributions that exceed the cap...
In this case, the amount of $2,000 is required to be returned to the member as $2,000 is the amount that the contribution of $452,000 exceeds three times the non-concessional contribution cap for the 2007-2008 financial year of $450,000.Date of decision: 5 May 2008
Year of income: Year ended 30 June 2008
ATO ID 2007/225
Item 80 of the Explanatory Statement to the Superannuation Industry (Supervision) Amendment Regulation 2007 (No. 1)
Excess non-concessional contributions
Self managed superannuation funds
Superannuation excess contributions tax
Date reviewed: 27 August 2014