A contribution to a fund can be more than just a deposit of money into the bank account of a superannuation fund. It could include:

  • Money
  • In-specie asset transfers
  • Paying fund expenses
  • Increasing the value of a fund asset
  • Forgiving a fund’s debt
  • Meeting a fund liability
  • Rendering services to the fund at less than market value
  • Guarantor arrangements
  • Some Discretionary Trust distributions

Trustees can often be surprised by what is considered to be a contribution, for example:

  • In-specie transfer – If an asset is transferred or acquired from a related party for less than fair market value, the difference may be treated as a contribution.
  • Capital improvements – Capital improvements to existing fund assets for no consideration or less than arm’s length consideration may be treated as a contribution.
  • Debt forgiveness – A contribution is made if a loan, entered into by the fund is forgiven by the lender (related party). The contribution is made when the deed of release is executed that then relieves the fund from the obligation of repaying the debt.
  • Guarantor arrangements – A contribution occurs if a guarantor to a debt of the fund (trustees in their own right) satisfies a loan obligation of the fund and then forgoes the right of redemption against the fund (trustees) itself.

If you are unsure, or want more information, please don’t hesitate to contact us.