Questions and answers

Is there a super contribution when an SMSF receives shares or options to acquire shares for less than market value as part of an employee share scheme?


If the scheme says the member can nominate their SMSF to receive shares or options and the trustee of the SMSF pays no consideration or less than the market value consideration for the shares or share options, the acquisitions by the SMSF result in super contributions if the contributions are made for the purpose of benefitting one or more particular members of the fund, or all of the members in general.

Are shares or share options issued to an SMSF through an ESS arrangement for an employee who is a member of an SMSF an employer contribution or personal contribution?

It is generally a personal contribution from the employee to their SMSF if the employee is granted personal rights to receive shares, or share options at a discount to market value, under an employee share scheme and either:

  • surrenders those rights so that the SMSF receives the shares or share options
  • exercises those rights but nominates their SMSF to receive the shares or share options.

Are the ordinary shares issued to the employee's SMSF after the employee exercised the share options through an ESS considered a personal contribution?

Yes, generally. There is a personal contribution to the SMSF that is equal to the market value of the shares if an employee who is a member of an SMSF:

  • acquires share options entitling the option holder to shares on the exercise of the options
  • exercises those options but directs that the shares be issued in the name of their SMSF at no cost to the SMSF.

An asset will generally be considered to be contributed when the SMSF gets legal ownership of the asset.

When the shares or share options are acquired by the SMSF from a related party does it count as an in-specie contribution?

Yes, acquiring shares, or share options, in an SMSF for less than market value results in an in-specie contribution.

In-specie contributions are contributions to an SMSF in the form of an asset other than money.

There are restrictions on the types of assets that can be contributed in-specie to an SMSF.

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    Last modified: 16 Jun 2016QC 26221