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SMSF Trustee & Contributions

SMSF Trustee and Contributions

The trustees, or directors of a corporate trustee, are in charge of managing the SMSF and are ultimately responsible for the decisions of an SMSF.

Types of trustees:

You can choose either of the following:
✓ A corporate trustee; or
✓ Up to four individual trustees.

A corporate trustee is a company that acts as a trustee for the SMSF. Generally, all directors of the corporate trustee must be members of your SMSF and all members must be directors of the corporate trustee. If you already have a company, you may choose to use it as the corporate trustee. If you choose individual trustees, each individual will act as trustee and will be responsible for the decision making of the SMSF. You must have at least 2 individual trustees. Generally all individual trustees must be members of the SMSF and all members must be individual trustees.

Trustee Eligibility

In most cases, all members of the SMSF must be trustees, so it’s important to make sure all members are eligible to be a trustee.Generally, anyone who is 18 years of age or over and is not under a legal disability (such as bankruptcy or mental impairment) or a disqualified person can be a trustee of a SMSF.

A person is disqualified from acting as trustee if any of the following apply, they:
✓ have been convicted of an offence involving dishonesty;
✓ have been subject to a civil penalty order under the super laws;
✓ are considered insolvent under administration;
✓ are an undischarged bankrupt; or
✓ have been disqualified by a regulator (for example, by ATO or APRA). A company cannot be a trustee if any of the following apply:
✓ the responsible officer of the company (such as a director, secretary or executive officer) is a disqualified person;
✓ a receiver, official manager or provisional liquidator has been appointed to the company; or
✓ Action has commenced to wind up the company.

Minors

While members under 18 years of age cannot be a trustee of a SMSF, a parent or guardian of a minor who does not have a legal personal representative can act as a trustee on the minor’s behalf.

Contributions

A contribution is a payment made to your SMSF in the form of money or an asset other than money transferred into your SMSF. Provided the governing rules of your SMSF allow it, your SMSF can generally accept:
✓ employer contributions;
✓ personal contributions;
✓ salary sacrifice contributions;
✓ super co-contributions; or
✓ Eligible spouse contributions.

Allowable Contributions

There are two broad types of allowable contributions – mandated employer contributions and non-mandated contributions

Mandated contributions:

Mandated employer contributions: Mandated employer contributions are those made by an employer under a law or an industrial agreement for the benefit of a fund member. They include super guarantee contributions. You can accept mandated employer contributions for members at any time, regardless of their age or the number of hours they’re working at that time.

Non-mandated contributions:

Non-mandated contributions include:
✓ contributions made by employers over and above their super guarantee or award obligations
✓ Member contributions – these are contributions made by, or on behalf of, a member (excluding employer contributions).

Whether you can accept a non-mandated contribution depends on the member’s age and circumstances. For example, for members under 65 years old, you can generally accept all types of contributions (subject to the relevant contribution caps), but for members 75 and over you cannot accept any non-mandated contributions.

For members who are 65 and over, non-mandated contributions can only be accepted if the member is gainfully employed for at least 40 hours in period of 30 consecutive days in each financial year in which the contributions are made. Unpaid work does not meet the definition of 'gainfully employed'. For some types of contributions, you can only accept the contribution if the member has given you their tax file number (TFN).

In specie contributions:

In specie contributions are contributions to your SMSF in the form of an asset, rather than money or cash. Generally, you can’t intentionally acquire assets (including in specie contributions) from related parties of your SMSF. However, there are some exceptions to this rule, such as listed securities and business real property acquired at market value.

Contribution Caps:

Contribution caps apply to contributions made for a member in a financial year. Excess contributions tax is generally payable on any contributions in excess of the contribution caps. There are different caps for:
✓ concessional contributions – such as employer contributions and personal contributions for which an income tax deduction has been claimed; and
✓ Non-concessional contributions – such as personal contributions for which an income tax deduction has not been claimed.

Concessional Contribution Cap:

Concessional Caps	2012-13	2013-14	2014-15
Under age 50	$25,000	$25,000	$25,000
Aged 50 to 59	$25,000	$25,000	$35,000
Aged 60 and over	$25,000	$35,000	$35,000
Tax on amounts over the cap	30% plus Medicare levy (in addition to the 15% paid by the SMSF)$35,000$35,000

Non-concessional Contribution Cap

Non-concessional Caps	2013-2014	‘Bring forward’ available
Under age 65	$150,000	Yes, up to 3 years ($450,000)
Aged 65 and over	$150,000	No
Tax on amounts over the cap	45% plus Medicare levy

Any contributions in excess of the concessional contributions cap will be applied against the non-concessional contributions cap People under 65 years old may be able to make non-concessional contributions of up to three times their non-concessional contributions cap over a three-year period. This is known as the ‘bring-forward’ option.

If you need a more strategic approach to SMSF advisory services, just consult the dedicated team of our professionals.

So, feel free to contact us.