Michael Hallinan

The ATO has confirmed the long held view that a rollover/benefit transfer to an SMSF in respect of a member will be treated as a contribution for the purpose of applying the active member test.

This test is one of three tests which is used to determine whether a complying superannuation fund has lost its residency status and transformed from an Australian superannuation fund to a non-resident superannuation fund.  The loss of residency status will cause a special tax to be imposed on the fund at the rate of 47% on the asset value of the fund (less undeducted contributions).

In short, once a member of an SMSF becomes a non-resident – no contributions, rollovers or benefit transfers by or in respect of the member should be received by the SMSF.

If not, the SMSF may fail the active member test and therefore cease to be a complying superannuation fund.

By Michael Hallinan – Special Counsel at Townsends Business & Corporate Lawyers

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From 1 July 2014, all super funds, including SMSFs, must receive contributions in the standard.

From 1 January 2015, it is expected that SMSFs will be required to use the new standard for payments and receipt of rollovers.

We will be focusing on supporting SMSFs during the introduction of the new standard.

SMSFs and contributions
From 1 July 2014, all super funds, including SMSFs, must receive contributions from medium and large employers in the data and e-commerce standard. From 1 July 2015, SMSFs must receive contributions from small employers in the standard format.

You will need to ensure you can receive these electronic messages and payments. This may mean receiving these through your administrator, upgrading your financial accounting software with your provider or subscribing to a message delivery service.

This should mean money gets into your SMSF faster and begins working for members sooner. You will also have the benefit of improved electronic record-keeping for tax and audit purposes.

There is an exemption when contributions are made from a related-party employer. The employer will be exempt from sending the data message and the SMSF will be exempt from receiving it (refer to regulation 7.07F (2)).

SMSFs and rollovers
From 1 January 2015, it is expected that SMSFs will need to use the standard for payments and receipt of rollovers. However, a new regulation is required to introduce this change and we will let you know if this happens.

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