Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of administratively binding advice

Authorisation Number: 1012413191538

This edited version of your advice will be published in the public Register of private binding rulings after 28 days from the issue date of the advice. The attached ATO advice fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Advice

Subject: Superannuation guarantee contributions to a regulated superannuation fund

Question

Can a private company (the Company), as the employer of an employee who is a member of a self managed superannuation fund (the Fund), contribute to the Fund for the benefit of the employee pursuant to Part 3 of the Superannuation Guarantee (Administration) Act 1992?

Advice/Answer

Yes

Relevant facts and circumstances

The Fund is a shareholder of the Company (the Employer). An individual trustee of the Fund is a working director and a salaried employee of the Company (the Employee).

The Employee will receive a base salary of a specified amount per year, a car allowance of a specified amount per year as well as superannuation support from the Company based on annual salary.

The Employer will make superannuation contributions to the Fund for the benefit of the Employee as is required of employers under the Superannuation Guarantee (Administration) Act 1992.

Relevant legislative provisions

Superannuation Guarantee (Administration) Act 1992 Part 3.

Superannuation Industry (Supervision) Regulations 1994 Sub-regulation 5.01(1).

Superannuation Industry (Supervision) Regulations 1994 Regulation 7.04.

Reasons for decision

Summary

The Employer may make superannuation guarantee contributions to the Fund for the benefit of the Employee.

Detailed reasoning

Pursuant to Part 3 of the Superannuation Guarantee (Administration) Act 1992 (the SGAA), a superannuation guarantee charge for a quarter is payable by an employer if the employer has one or more individual superannuation guarantee shortfalls for the quarter in respect of one or more employees. The charge percentage, currently at 9% of the total salary or wages paid by the employer to the employee for the quarter, will be reduced if the employer contributes for the benefit of that employee to a complying superannuation fund in that quarter. The reduction is worked out using the following formula:

1

On Super Fund Lookup, an Australian Government website, the current status of the Fund is stated as 'Registered - status not determined', which means, according to the explanation provided there, that the Fund:

· is treated as complying and is eligible to receive rollovers and transfers;

· is a regulated fund;

· has not been issued with a Notice of compliance or a Notice of non-compliance. (A notice of the fund's complying status is usually issued after the fund lodges its first annual return).

For employers making superannuation guarantee contributions, Super Fund Lookup suggests that:

You may need to obtain a written statement from the fund that it is a resident regulated super fund as defined in the Superannuation Industry (Supervision) Act 1993 (SISA) and that it is not prevented from accepting employer contributions to ensure a contribution to this fund qualifies as a superannuation guarantee payment.

Unless the Fund, being a regulated superannuation fund, has received from the Commissioner (as the Regulator of self managed superannuation funds) a notice of non-compliance and/or a notice given under section 63 of the SISA directing the trustee of the Fund not to accept any contributions made to the Fund by an employer-sponsor, the Company may make superannuation guarantee contributions to the Fund for the benefit of the Applicant as an employee of the Company.

It should, however, be noted that acceptance of contributions by a regulated superannuation fund is subject to the restrictions imposed by regulation 7.04 of the SISR. For example:

(1) acceptance of member contributions2 from a member is dependent on the member's age and, where applicable, on whether the member is gainfully employed on at least a part-time basis;

(2) member contributions from a member cannot be accepted unless the tax file number of the member has been quoted to the trustee of the fund;

(3) the amount of fund-capped contributions3 that the fund may accept in respect of a member is limited to:

Disclaimer

You cannot rely on the written binding advice in the Register of private binding rulings in your tax affairs. You can only rely on advice that we have given to you or to someone acting on your behalf.

The Register of private binding rulings is a public record of written binding advice issued by the ATO. The register is an historical record and we do not update it to reflect changes in the law or our policies.

The written binding advice in the register has been edited and may not contain all the factual details relevant to each decision. Do not use it to predict ATO policy or decisions.

1 As per its definition in subsection 6(1) of the SGAA, 'ordinary time earnings' generally refer to:

(a) the total of:

(i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment in lieu of unused sick leave, unused annual leave, or unused long service leave on termination of an employee's employment; and

(ii) earnings consisting of over-award payments, shift-loading or commission; or

(b) if the total in (a) exceeds the maximum contribution base for a quarter, the maximum contribution base.

See Superannuation Guarantee Ruling SGR 2009/2 for further information.

2 According to sub-regulation 5.01(1) of the SISR, 'member contributions', in relation to a member of a regulated superannuation, means contributions by, or on behalf of, the member to the fund, but does not include employer contributions made in respect of the member.

3 'Fund-capped contributions' refer generally to 'member contributions', subject to certain exceptions, as per its definition in sub-regulation 7.04(4).

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).