Contributions and Transfers In
Typically, contributions into SMSFs are sourced from either the members or the members’ employers. Transfers in are benefits transferred from other superannuation entities. Contributions are classified as either concessional, for which a tax deduction has been claimed by the contributor, or non-concessional, for which no tax deduction has been claimed by the member. Contributions and transfers in to a SMSF may include:
- Employer contributions, including SGC, award and salary sacrifice contributions;
- Member contributions, both concessional and non-concessional;
- Spouse contributions;
- Child contributions;
- Rollovers from other complying funds;
- Small business rollovers Capital Gains Tax (CGT) (small business retirement exemption and CGT small business 15 year exemption amounts);
- Amounts transferred from a foreign fund;
- Government co-contributions;
- Transfers from the Superannuation Holding Accounts Reserve (SHAR) held by the ATO;
- Personal injury election;
- Other family and friend contributions; and
- Downsizer contribution.
Contributions may be made in cash or in-specie (by transferring an asset) or a combination of both if the fund’s governing rules permit the SMSF to accept contributions that are made in-specie. Where contributions are made via an in-specie asset transfer, the auditor determines whether the requirements of section 66 of the SISA have been met.
The assertions for auditing contributions received by a SMSF are:
- Occurrence – contributions and transfers in recorded by the SMSF are real and have occurred.
- Completeness – contributions and transfers in from or on behalf of members have been received and recorded.
- Accuracy – contributions and transfers in have been recorded appropriately.
- Cut-off – contributions and transfers in have been recorded in the correct period.
- Classification – contributions and transfers in have been allocated to the correct member and correctly classified as concessional or non-concessional.
Audit risks to be considered in relation to contributions and transfers in may include, but are not limited to:
- incorrect classification and allocation of concessional and NCCs, and other contributions categories listed in paragraph 241;
- incorrect tax treatment of contributions;
- incorrect cut-off for contributions resulting in failure to recognise that contribution caps have been exceeded;
- incorrect allocation of the tax components of transfers in;
- acceptance of contributions in excess of the fund-capped contributions limit;
- understatement of market values for in-specie contributions to avoid exceeding the contributions caps; and
- under or overstatement of market values for in-specie contributions, either to provide early access to benefits or to disguise loans to members.
Auditors consider the appropriateness of audit evidence to confirm contributions are not materially misstated, such as employer confirmations of contributions paid to the fund or reviewing member pay as you go (PAYG) information analytically.
See the Self-Managed Superannuation Fund annual return (NAT 71226).