Since superannuation contributions come in several forms; SMSF members would be wise to understand what contributions are available and how they might impact them in regards to the contribution limits.
The ATO considers a ‘contribution’ as anything of value that increases the capital of a superannuation fund provided by a person whose purpose is to benefit one or more particular members of the fund or all of the members in general. SMSF members are required to keep track of contributions their employer, themselves or others make on their behalf into their self-managed super fund.
When deciding whether an event is a contribution, a person’s objective purpose will be taken into account. For example, an increase in an SMSF’s capital due to income, profits and gains arising from the use of the SMSF’s assets is not derived from someone whose purpose is to benefit the members. However, it may still be viewed as a contribution. Other situations where a SMSF member may not be aware that they have made a contribution include:
Cash and EFT transfers
A cash contribution or EFT transfer is made when an amount is received by the SMSF trustee or credited to the relevant SMSF bank account. How the transfer occurs is relevant to whether the fund’s capital is increased and when a particular contribution is made. An amount set aside but not actually paid is not a contribution. However, an actual payment or reimbursement for certain expenses incurred by the fund may constitute as a contribution.
Members can transfer assets in the form of business real property to their SMSF. These contributions will be subject to contribution cap limits.
Members can transfer shares (in a publicly listed company) to their SMSF. The value of the shares is regarded as a contribution and subject to the contribution cap limits.
Improvements to an asset
Where the capital of the SMSF is increased due to the improvements of the SMSF’s assets e.g. when a fixture is added to an SMSF’s property.
Payment of a liability
Where a member pays the SMSF’s expenses, which results in an increase in capital. In instances where a member satisfies an SMSF’s loan obligations as a guarantor to a loan this may constitute as a contribution as the guarantor’s payment removes the fund’s liability and therefore increases capital.
Start to take control of your SMSF and call Lee and Lee today. We are here to help. We are SMSF Specialist Accountant and members of the SMSF Association.
Susan Flux, Brisbane
Since that time I known Tony and his team at Lee and Lee, they have provided me with outstanding advice and services regarding my personal, family and especially my SMSF borrowing setup for wealth creation and tax reduction strategies that have since led to financial independence.
I now very clear and feel confident on my future financial goals and taxation strategies and know they can be achieved with Tony’s expert and professional help.
Shukri Barbara, Property Tax Specialists Sydney
Tony’s understanding of the business and tax environments, together with his experience and can do attitude enables him to deliver creative solutions outside the square as much as inside, A positive thinker I find Tony inspiring, guiding clients and associates to a prosperity mindset.
Tony has impressed me with his technical knowledge and execution. He works with honesty and integrity and is generous in his dealings.
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Tony Lee and his team at Lee & Lee is without a doubt Australia’s number one accounting firm.
Tony has the strategies which are helping me legally minimise tax. He has helped me in my personal development and wealth creation to build a multimillion dollar property portfolio.