A super fund may receive compensation from a financial services provider due to the provision of inappropriate financial advice or where fees were paid but no advice was provided. The compensation may include an amount reflecting a refund or reimbursement of adviser fees and/or an amount to compensate for lost earnings. It may also include an interest component.

On 12 August the ATO released a Super contribution caps fact sheet that explains how receipt of these types of compensation payments by a super fund may impact contribution caps. It also explains how to apply to the ATO to request the Commissioner to exercise discretion to either disregard or reallocate the contribution in circumstances where caps are exceeded.

Whether the compensation is a contribution (and therefore counted towards a contribution cap) will depend on the circumstances in which the compensation is received. This includes

Circumstance

Treatment of compensation

Where the super fund engaged the financial service provider and has a right to compensation

This is not considered to be a contribution and won’t affect contribution caps

Where the member personally engaged the financial services provider and has a right to compensation

If paid directly by the financial service provider to your super fund (other than at your direction) this is considered a concessional contribution

If you directed the financial service provider to pay the compensation to your fund, or it was paid to you and you subsequently contributed it to super, it will be considered a non-concessional contribution

Where there is no right to seek compensation

This is considered a concessional contribution


Further information

Australian Taxation Office, Super contributions caps, 12 August 2021

Additional information

Macquarie Investment Management Limited ABN 66 002 867 003 AFSL 237 492 RSEL L0001281 (MIML) is the operator of Macquarie Investment Manager, Macquarie Investment Manager II, Macquarie Investment Consolidator, Macquarie Investment Consolidator II and Macquarie Investment Accumulator; and is the Trustee of the Macquarie Superannuation Plan.

This information is provided for the use of licensed and accredited brokers and financial advisers only. In no circumstances is it to be used by a potential client for the purposes of making a decision about a financial product or class of products.

The information on this page does not take into account your objectives, financial situation or needs. Before making any financial investment decision or a decision about whether to acquire a product mentioned on this page, a person should obtain and review the terms and conditions relating to that product and also seek independent financial, legal and taxation advice.

Unless stated otherwise, this information has been prepared by Macquarie Bank Limited AFSL and Australian Credit Licence 237502. It is provided for the use of licensed and accredited brokers and financial advisers only. In no circumstances is it to be used by a potential client for the purposes of making a decision about a financial product or class of products.