Private ruling: Superannuation guarantee contributions to a regulated superannuation fund
Published: January 2013

Ruling: Q1: Can a private company (the Company), as the employer of an employee who is a member of a self managed superannuation fund (the Fund), contribute to the Fund for the benefit of the employee pursuant to Part 3 of the Superannuation Guarantee (Administration) Act 1992 ? Advice/Answer Yes

Relevant facts and circumstances: The Fund is a shareholder of the Company (the Employer). An individual trustee of the Fund is a working director and a salaried employee of the Company (the Employee). The Employee will receive a base salary of a specified amount per year, a car allowance of a specified amount per year as well as superannuation support from the Company based on annual salary. The Employer will make superannuation contributions to the Fund for the benefit of the Employee as is required of employers under the Superannuation Guarantee (Administration) Act 1992 .

Relevant legislative provisions: Superannuation Guarantee (Administration) Act 1992 Part 3. | Superannuation Industry (Supervision) Regulations 1994 Sub-regulation 5.01(1). | Superannuation Industry (Supervision) Regulations 1994 Regulation 7.04.

Reasons for decision: Summary: The Employer may make superannuation guarantee contributions to the Fund for the benefit of the Employee. | Detailed Reasoning - Detailed reasoning: Pursuant to Part 3 of the Superannuation Guarantee (Administration) Act 1992 (the SGAA), a superannuation guarantee charge for a quarter is payable by an employer if the employer has one or more individual superannuation guarantee shortfalls for the quarter in respect of one or more employees. The charge percentage, currently at 9% of the total salary or wages paid by the employer to the employee for the quarter, will be reduced if the employer contributes for the benefit of that employee to a complying superannuation fund in that quarter. The reduction is worked out using the following formula: 1 On Super Fund Lookup , an Australian Government website, the current status of the Fund is stated as 'Registered - status not determined', which means, according to the explanation provided there, that the Fund: · is treated as complying and is eligible to receive rollovers and transfers; · is a regulated fund; · has not been issued with a Notice of compliance or a Notice of non-compliance . (A notice of the fund's complying status is usually issued after the fund lodges its first annual return). For employers making superannuation guarantee contributions, Super Fund Lookup suggests that: You may need to obtain a written statement from the fund that it is a resident regulated super fund as defined in the Superannuation Industry (Supervision) Act 1993 (SISA) and that it is not prevented from accepting employer contributions to ensure a contribution to this fund qualifies as a superannuation guarantee payment. Unless the Fund, being a regulated superannuation fund, has received from the Commissioner (as the Regulator of self managed superannuation funds) a notice of non-compliance and/or a notice given under section 63 of the SISA directing the trustee of the Fund not to accept any contributions made to the Fund by an employer-sponsor, the Company may make superannuation guarantee contributions to the Fund for the benefit of the Applicant as an employee of the Company. It should, however, be noted that acceptance of contributions by a regulated superannuation fund is subject to the restrictions imposed by regulation 7.04 of the SISR. For example: (1) acceptance of member contributions 2 from a member is dependent on the member's age and, where applicable, on whether the member is gainfully employed on at least a part-time basis; (2) member contributions from a member cannot be accepted unless the tax file number of the member has been quoted to the trustee of the fund; (3) the amount of fund-capped contributions 3 that the fund may accept in respect of a member is limited to: (a) three times the amount of the non-concessional contributions cap if the member is 64 years of age or less; or (b) the non-concessional contributions cap if the member is between 65 and 75 years of age . | Detailed Reasoning - Disclaimer: You cannot rely on the written binding advice in the Register of private binding rulings in your tax affairs. You can only rely on advice that we have given to you or to someone acting on your behalf. The Register of private binding rulings is a public record of written binding advice issued by the ATO. The register is an historical record and we do not update it to reflect changes in the law or our policies. The written binding advice in the register has been edited and may not contain all the factual details relevant to each decision. Do not use it to predict ATO policy or decisions. 1 As per its definition in subsection 6(1) of the SGAA, 'ordinary time earnings' generally refer to: (a) the total of: (i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment in lieu of unused sick leave, unused annual leave, or unused long service leave on termination of an employee's employment; and (ii) earnings consisting of over-award payments, shift-loading or commission; or (b) if the total in (a) exceeds the maximum contribution base for a quarter, the maximum contribution base. See Superannuation Guarantee Ruling SGR 2009/2 for further information. 2 According to sub-regulation 5.01(1) of the SISR, 'member contributions', in relation to a member of a regulated superannuation, means contributions by, or on behalf of, the member to the fund, but does not include employer contributions made in respect of the member. 3 'Fund-capped contributions' refer generally to 'member contributions', subject to certain exceptions, as per its definition in sub-regulation 7.04(4).

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