What contributions can SMSF accept
Contributions can play an essential role in a self-managed superannuation fund. A contribution can be viewed as anything of value that increases the capital of the fund.
Typically, your SMSF can accept:
- Concessional Contributions
- Non- Concessional Contributions
- “In specie” Contributions
Concessional contributions (CC) are contributions made into your SMSF that are included in the SMSF's assessable income. These contributions are taxed in your SMSF at a ‘concessional’ rate of 15%. The most common types of concessional contributions are employer contributions and salary sacrifice contributions. Concessional contributions also include personal contributions made by the member for which the member claims an income tax deduction.
CC are subjected to a yearly cap. From 1 July 2017, the general CC cap is $25,000 for all individuals regardless of age. From 1 July 2018, members can “carry-forward” their unused CC cap for up to 5 financial years if their total super balance (TSB) is less than $500,000 on 30 June of the previous financial year. The first year in which members will be able to access their unused CC is the 2019/2020 financial year.
Non- Concessional Contributions
Non-concessional contributions (NCC) are contributions made into your SMSF that are not included in the SMSF's assessable income. These contributions include:
- Personal Contributions
- Eligible spouse contributions
- Contribution made for a child under 18
NCC also include excess concessional contributions for the ﬁnancial year. NCC are subjected to a yearly cap. From 1 July 2017 the cap is $100,000. If the member is under the age of 65 they will have an option of contributing up to $300,000 if the 3 year “bring forward” (BFR) is applied. Eligibility to make NCC is dependent on the member having a TSB less than 1.6 million at 30 June of the previous financial year.
“In specie’ Contributions
‘In specie’ contributions, refers to transferring assets such as shares or commercial property directly to the SMSF rather than contributing cash. An in-specie contribution is a non-cash contribution to the super fund. There are very strict rules on what can and can’t be transferred when it comes to in-house assets. The assets may not be contributed to an SMSF by a related party unless they are acquired by the fund at market value.
|Members Age at the time of contribution||Personal member contribution (personal concessional or non-concessional contribution)||Spouse or other contribution||Voluntary employer contributions (salary sacrifice or other employer contributions in excess of Super Guarantee)||Mandated employer contributions (Super Guarantee contributions)|
|Members aged under 65||Permitted||Permitted||Permitted||Permitted|
|Members aged 65 to under 70||Permitted subject to work test||Permitted subject to work test||Permitted subject to work test||Permitted|
|Members aged 70 to under 75||Permitted subject to work test||Not permitted||Permitted subject to work test||Permitted|
|Members aged 75 and over||Not permitted||Not permitted||Not permitted||Permitted|
If a member over the age of 65 has been gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in the financial year, the member will have to satisfy the work test. Work test must be satisfied prior to the contributions being made.
Exceeding your cap
If your total contributions exceed the contributions caps those excess contributions could attract additional tax. The actual amount of tax will depend on the member's age, the financial year that the contributions relate to, and whether the contributions are concessional or non-concessional.