Self Managed Superannuation Funds

Running a Self Managed Superannuation Fund

Super Terms Explained

Gainfully employed

Means employed or self employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment. Gain or reward means you receive remuneration such as wages, business income, bonuses and commissions in return for personal exertion from these activities. It does not include gaining passive income such as rent or dividends.

Employment of a full-time basis

Means gainful employment for at least 30 hours each week.

Employed on a part-time basis

For the purposes of a fund accepting contributions, means has been gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in that financial year.

Concessional contributions

Generally, are contributions made into your Self Managed Super Fund that are included in the Self Managed Super Funds assessable income. The most common types are employer contributions and personal contributions that you or your employer claims as an income tax deduction. Employer contributions include super guarantee contributions and salary sacrifice contributions. These contributions are taxed at a lower 'concessional' rate of 15% which is often referred to as 'contributions tax'.

Concessional contributions are subject to a yearly cap - currently $50,000 (indexed) a year. For people 50 or over, the transitional cap is $100,000, per financial year, until 30 June 2012. The transitional cap os not indexed. Contributions over the cap are subject to excess concessional contributions tax.

Excess concessional contributions tax is 31.5% on concessional contributions over the cap. The member is personally liable for this tax, but can ask the fund to release money to pay it.

Non-concessional contributions

Generally, are contributions made in to your SMSF that are not included in the SMSFs assessable income. The most common type are personal contributions, that are not claimed as an income tax deduction.

Non-concessional contributions are subject t a yearly cap of $150,000, or $450,000 over a three year period. The non-concessional contributions cap is always three times the concessional contributions cap. A tax of 46.5% is levied for non-concessional contributions made over the cap. Individual members are personally liable for this tax and need to have their super fund release any amount of money equal to the tax. Non-concessional contributions also include excess concessional contributions for the financial year. They don't include super co-contributions, structured settlements or orders for personal injury, CGT related payments under the CGT cap and rollovers.

Rogerson Kenny Business Accountants Melbourne can assist you with your accounting and auditing requirements. If you would like to appoint Rogerson Kenny Business Accountants as your approved auditor, or would like to discuss this topic further, click contact us or call us on (03) 9802 2533.

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