DIY Super funds can accept mandated employer contributions at any time. This means a trustee for a Self Managed Super Fund can accept mandated employer contributions for a member regardless of the age of the member or the number of hours they work.
Mandated contributions are made by an employer for the benefit of the fund member is to extinguish employer’s potential liability to the superannuation guarantee charge, namely 9%.
Where members have an effective Salary Sacrifice arrangement in place with their employer to salary sacrifice to superannuation, all superannuation contributions are considered to be made by the employer. However, only those contributions to the superannuation guarantee level (9% from 1 July 2002) or the industrial award or agreement level (if higher than the superannuation guarantee level) will be classed as 'mandated employer contributions'.
Contributions which are not mandated employer contributions (such as the member’s own contributions or salary sacrifice component) can only be accepted by the trustees of a DIY Super Fund in the following circumstances
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From 1 July 2004, the superannuation contribution work test has been abolished for anyone under the age of 65, thereby allowing anyone under the age of 65 to make a superannuation contribution
If the member is under the age of 18 at 30 June, they would need to derive eligible employment income or business income in the income year before income tax deductions for superannuation can be claimed.
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From 1 July 2004, for those aged 65 to 74, the superannuation contribution rules have been changed from a weekly work test (at least 10 hours in each week) to an annual work test.
A person in this age group will be able to make personal contributions to their self managed superannuation fund during a financial year provided they can demonstrate that, in that financial year, they have worked at least 40 hours in a period of not more than 30 consecutive days.
This amount of paid work only has to be demonstrated once each financial year. For example, a person who has worked 40 hours in a fortnight will be able to make contributions for the rest of the financial year.
Aged 65 to 69: a trustee may only accept contributions other than mandated employer contributions in respect of a member if the member is gainfully employed (This means employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment. Gain or reward is the receipt of remuneration such as wages, business income, bonuses and commissions, in return for personal exertion from these activities.
It does not include the passive receipt of income (for example, receipt of rent or dividends)) on at least a part-time basis during the financial year in which the contribution is made.
Aged 70 to 74: A trustee may only accept contributions other than mandated employer contributions if the contributions are personal contributions made by the member and the member is gainfully employed on at least a part-time basis (for at least 10 hours and less than 30 hours each week for at least 40 hours in a continuous 30 day period in that same financial year) in the financial year in which the contribution is made
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A trustee may only accept mandated employer contributions |
A trustee who intentionally or recklessly fails to follow the above rules is guilty of an offence under the SIS Act and the failure to comply may result in a fine of up to $11,000 or the fund being made non-complying and losing the taxation concessions available to complying superannuation funds.
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