Business Succession PlanningDolfinwise Super Strategies

A regulated superannuation fund can accept contributions (subject to more restrictive fund rules) provided the following conditions are met:

 * Exclude contributions with a valid tax deduction notice, personal injury amounts, proceeds from the sale of certain small businesses, SG shortfalls, SHA amounts, Government co-contributions, and employer direct termination payments (DTPs).

** Deductible contributions above the concessional contributions (CC) cap will count towards the non-concessional contributions (NCC) cap.

TFN Test

 A regulated superannuation fund must not accept member contributions if the member has not quoted their tax file number (TFN) to the fund. Where a fund receives an amount and is unable to accept it due to the conditions in the table above, or the member hasn't quoted their TFN, the fund must return the amount to the member within 30 days of becoming aware that this is the case. A super fund does not have to return employer contributions where a TFN has not been quoted, however, this will trigger no-TFN contributions tax.

There is limited trustee discretion to accept contributions for an individual who is no longer able to contribute, where the contributions are made in respect of a period when the individual was able to contribute. Exercise of discretion is subject to trustee requirements and trust deed provisions.

Gainful employment

'Gainfully employed' for superannuation purposes is defined as being employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment [SIS Reg 1.03(1)]. The concept of 'gain or reward' envisages receipt of remuneration such as salary or wages, business income, bonuses, commissions, fees or gratuities, in return for personal exertion.

For acceptance of contributions, the test of gainful employment for members 65 and older is gainful employment on at least a part time basis in the financial year in which the contribution is made.

Under SIS Reg 7.01 a member is gainfully employed on a part-time basis during a financial year if the member has worked at least 40 hours in a period of not more than 30 consecutive days in that financial year. The trustee cannot take prospective employment into account - the member must have worked at least 40 hours in the financial year before the trustee can accept the contribution.

The definition of gainful employment involves two components as follows:

(1) Employment (including self-employment)

In the case where one is not an employee and is relying on being self-employed there is an implication of the carrying on of a business. In determining whether or not a business is being carried on, it is appropriate to look at:

	the nature of the activities, particularly whether they have the purpose of profit making;
	repetition and regularity of the activities;
	organisation of activities in a business-like manner including the keeping of books, records and the use of a system;and
	the volume of operations and the amount of capital employed.

(2) Gain or reward

The definition of gain or reward is particularly broad and clearly does not limit itself to payment of salary or wages. In this context, the employment or self-employment discussed above, i.e. the service, merit or hardship must be met with some expectation of an increase, addition or profit.

An individual would be more likely to satisfy the 'employment' and 'gainful employment' tests where:

	there is a clear link between the individual's official employment duties and the gain or reward actually received, and
	the link between the person's official duties and the actual reward received is part of a written employment contract, agreement or arrangement.