Meaning of contributions
The word ‘contribution’ is generally not defined in the law. The term's ordinary meaning is discussed in Taxation Ruling TR 2010/1 Income tax: superannuation contributions.
For a receiving provider, it is the characteristics of an amount that comes into your hands that will determine if it is a contribution. Generally, any amount that increases your fund's capital is a contribution. However, not all of these amounts are required to be reported to us as part of your member information reporting.
If an amount is derived or received as income, profit or gain from an investment, or is the realisation of an investment from your existing capital, it is not a contribution.
Amount of a contribution
The amount of a contribution is the gross amount originally contributed excluding deductions of tax, fees or other amounts. In some cases, you may need to calculate the market value – for example, in relation to in specie contributions.
Always report the full amount of the contribution that was originally made for the member, do not reduce the amount by any:
- fees, taxes and investment losses that may reduce an account balance below what was originally contributed
- contributions rolled over, transferred or allotted to a spouse under a contributions splitting arrangement
- super benefits paid to the member
- contributions paid out to the member under the hardship provisions
- amounts released in accordance with a release authority.
If you return a contribution in restitution of a mistake of law or fact, you should not report it to us, unless otherwise advised. If you have already reported it, you will need to correct your reporting.
To correct a mistake, see Amendments protocol.
Income year for which a contribution is reported
Report a contribution according to when the contribution was legally made – not when it was allocated. Do this regardless of the intentions of either the member or their employer. The period in which a contribution was intended to be made by the member or an employer does not affect when it was actually made. In this regard, you have no discretion in how you report the contribution.
Contributions received by you (made) on or before 30 June of a financial year, but not allocated to the member’s account until the next financial year, should be reported as being made in the earlier year. Conversely, where a member attempts to make a contribution on 30 June but it is not received by you until July, the contribution is considered to have been made on the day it was received by you.
Even if, for some other legal or practical purpose the contribution is recognised in a different year, for member contribution reporting purposes the contribution should be attributed to the year it was made (received by the provider). See example 2 for when a contribution may be legally recognised in another year than it was reported.
If you are applying Taxation Determination TD 2013/22 Income tax: 'concessional contributions' – allocation of a superannuation contribution with effect from a day in the financial year after the financial year in which the contribution was made to the reporting of contributions, note that our administrative assumption is that contributions are always made and allocated in the same year. Therefore, affected members may need to bring their circumstances to our attention when this assumption does not apply.
TD 2013/22 is not considered to apply as a broad brush approach that a provider should take for all of its members. It is used on a case by case basis which require the same or similar circumstances as discussed in the determination. Applying this determination may require either:
- additional notification from you
- an objection from the member to an impacted assessment of excess contributions tax (for 2012–13 and earlier financial years)
- an income tax assessment that includes excess concessional contributions in their assessable income (for 2013–14 and later financial years).
Example 1: allocation of contribution not made in the same financial year it was reported
As part of a salary sacrifice arrangement, Austin's employer made a contribution for him of $10,000 on 29 June 2016. The contribution was received into his fund's bank account on the same date; however the contribution was not allocated to an account for Austin until 1 July 2016.
The contribution was correctly reported as being made on 29 June 2016 as an employer contribution for Austin for the 2015–16 financial year.
End of example
Example 2: when a contribution can be legally recognised in another year than it was reported
Melanie had arranged for her employer, Wild Villas, to make regular personal contributions during the year, totalling $1,000, to allow her to take advantage of the maximum super co-contribution. The contributions were made by after-tax payroll deductions and paid monthly to her fund along with her employer contributions. Melanie's last monthly pay for the year was on 23 June 2017 when Wild Villas sent contributions of $83 (personal) and $400 (employer) to the fund. Her payments were part of a large cheque that covered contributions for all Wild Villas employees which was dated 28 June 2017 and mailed the next day. The cheque was received by the fund on 3 July 2017.
Wild Villas has satisfied its super guarantee obligations for Melanie for the 2016–17 financial year as the contribution was made by 28 July 2017. However, the fund should report for Melanie that both the $83 and $400 were contributed in the 2017–18 financial year.
Melanie asked the fund to re-report the $83 and treat the contribution as being made in the 2016–17 (the year it was intended for) but the fund correctly refused to do so, referring Melanie to the ATO's ruling TR 2010/1. Unfortunately, she was not entitled to the full co-contribution for the 2016–17 financial year. However, the contribution did count towards her co-contributions entitlement for the 2017–18 financial year.
End of exampleAcceptance of contributions
You may only accept contributions in accordance with regulation 7.04 of the Superannuation Industry Supervision Regulations 1994 (SISR). Circumstances in which you cannot accept certain contributions include where:
- the member is over a certain age
- the member has not quoted their tax file number (TFN) to you.
If a contribution is inconsistent with regulation 7.04 of the SISR, you should not accept it.
If you do accept a contribution that you shouldn't have, you must return it within 30 days of becoming aware of the error. Failure to comply with the time limit does not affect your legal obligation to return the contributions. An exception to this rule is if the member had initially failed to quote their TFN but then provided it to you within the 30 day period.
The 30-day limit is a period of grace allowing you to remove the contributions from the super system without breaching the payment or contribution rules.
Returning contributions under regulation 7.04 of the SISR may have implications for contributions reporting.
Release authority and contributions
When you receive a valid release authority, the member has satisfied a condition of release. You are authorised to release a benefit, but not to refund contributions. The contributions that gave rise to an actual or potential liability to excess contributions tax are past transactions that are unchanged by application of the release authority.
Actioning a release authority must have no impact on the contributions you report, or on any contributions tax you applied to the member account when the contributions were made.
The release authority does not impact contributions reporting for a member, or whether the contributions are considered assessable contributions for the purposes of your fund's income tax liability.
You must ensure that your systems do not trigger a re-report when you action a release authority.