Returning super contributions: age, tfn, fund capped & mistakes

Returning Super ContributionsThere are certain circumstances in which a super fund is required to return a superannuation contribution received:

  • Age restricted
  • Tax File Number
  • Fund Capped Contributions

Though it is also possible for a super fund to return a contribution that was made by mistake.

Age restricted

Regulation 7.04 of SISR creates a number of restrictions around super funds accepting contributions, many of these are related to the members age:

When can a super fund accept a contribution?

 Type of Contribution / Members Age <65 65 – 69 70 – 74 75+
Mandated Employer Contributions (Super Guarantee) Yes Yes Yes Yes
Other Employer Contributions Yes Yes * Yes * No
Member Contributions Yes Yes * Yes * No

*If work test is passed.

If a super fund receives a contribution which it is unable to accept – for example a member contribution from someone over age 75, “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 the subregulation]” – SISR 7.04(4)a.

Tax File Number

SISR reg 7.04(2) states that a super fund “must not accept any member contributions if the member’s tax file number has not been quoted (for superannuation purposes) to the trustee of the fund”.  Such a contribution must be returned within 30 days of becoming aware, although there is an exemption if the members TFN is quoted within 30 days of the amount being received by the fund.

Fund Capped Contributions

A super fund is prevented from accepting a single contribution greater than the fund capped contributions limit, regulation 7.04 sets the fund capped amounts as:

“(a)  if the member is 64 or less on 1 July of the financial year–three times the amount of the non-concessional contributions cap; or

(b)  if the member is 65 but less than 75 on 1 July of the financial year–the non-concessional contributions cap”

If a contribution greater than this is received the excess is to be returned within 30 days of becoming aware that the contribution is inconsistent with the regulations. Fund Capped contributions are covered in more detail in this article.

Mistake

In general, a contribution cannot be returned to a member because it did not have the effect intended or because of a misunderstanding by the member. Making a contribution and then finding it cannot be claimed as a tax deduction would likely not be sufficient –  see ATO ID 2010/104 for the ATOs discussion of why a contribution should not have been returned where a member misunderstood the contribution caps. In order to be refunded a contribution must not have been intended to be made – see the ATO document Restitution for mistake.

However, based on the cases highlighted in the ATO ID it is possible that there may be wider scope for returning super contributions, though this is diminished in situations where it is the member choosing to contribute a particular amount.

The rules for returning super contributions the contributions draws little from the legislation or regulations and instead falls back on legal principals of “law of restitution” and “principle of unjust enrichment” – again see the argument made in ATO ID 2010/104. As such, before considering returning a contribution based on mistake you should strongly consider seeking legal advice.

It would likely be better if there were clear guidelines in the legislation or regulations setting out when a contribution could or should be returned, though of course there would still be the general legal avenues for redress.

What if it’s past the 30 days?

The ATO is of the view that the contribution must still be returned after the 30 days has passed – see ATO ID 2009/29.

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