Awan Hammad

    Hi Faye

    The audit report section that is relevant is SIS Regulation 7.04 that requires:

    “Contributions can only be accepted in accordance with the applicable rules for the year

    being audited”.

    For the year ended 30 June 2022 for those that are 75 years or older a Fund can only accept contributions that are:

    “(a) mandated employer contributions; or

    (b) downsizer contributions.”

    Salary sacrifice amounts are not mandated employer contributions so there has been a breach of this section.

    Under SIS Regulation 7.04(4) the “fund must return the amount to the entity or person that paid the amount within 30 days of becoming aware that the amount was received in a manner that is inconsistent” with SIS Regulation 7.04.

    Further under SIS Regulation 7.04(5):

    “If a regulated superannuation fund acts under subregulation (4), the fund is taken not to have contravened the Act or these Regulations in relation to the acceptance of the amount or in relation to the return of the amount to the entity or person that paid the amount of the fund.”

    To rectify the breach the contributions must be returned within 30 days of the trustees being made aware. If the contributions have been returned within 30 days of being made aware there is no breach of SIS.

    I also note that the ATO advises at:

    Returning contributions
    There are rules for accepting contributions that all trustees need to know.

    “If your SMSF cannot accept the contribution of a member because of these restrictions, you must return the amount to the member or entity who contributed it.

    You must return the contribution within 30 days of becoming aware that you cannot accept it. For an SMSF we consider you’re aware that a contribution is in breach of the law when you become aware of the contribution itself. This would generally be on the day you receive the contribution.

    We expect you to act with care, skill, diligence, and to:

    know which types of contributions breach the super laws
    have a process to work out whether a particular contribution breaches the super laws
    return non-acceptable contributions within 30 days of receiving them.

    The ATO view is that the 30-day requirement obliges funds to return contributions without delay. The trustee remains obliged under SISR subregulation 7.04(4) to return the amount, even if more than 30 days has elapsed since the trustee became aware of the obligation.”




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