$150/$450,000 Contribution Limits

The SIS Regulation 7.04(3) imposes a limit on the size of member contributions which the trustee can accept.

For the current financial year, 2008/09, the limits are:

• $150,000 if the member was 65 or more at 1 July 2008; and
• $450,000 if the member was 64 or less at 1 July 2008.

These limits apply on a contribution-by-contribution basis (it does not apply to the aggregate of member contributions received by the fund or even to the aggregate of all member contributions made for the member in a financial year).

If a member contribution is received which exceeds the relevant limit, the Trustee must return the excess within 30 days of realising that the contribution is excessive.

Returning the excess will also have the benefit of avoiding excess contribution tax (at 46.5%) on the excess contribution.

Any contributions returned on this basis do not need to be reported as a member contribution.

The difficulty is determining when the 30 day period commences.  The ATO view is that the 30 day period will generally commence on the day the contribution is received by or for the trustee.  This is the time when the trustee should know the nature and amount of the contribution.

If the trustee fails to act within the 30 day period then the contribution cannot be returned and must be reported as a received member contribution.  Consequently, an excess contributions tax liability will arise which must be paid by the trustee (with the member’s account being debited with the tax payment).

(This limit is separate from the concessional and non-concessional contributions caps which apply under the Income Tax Assessment Act, 1997).