SMSF Glossary: 146 Key Terms Explained
Every term you'll encounter as an SMSF trustee, defined clearly. Use the A–Z bar to jump to a term, or scroll through at your own pace. Where a term is covered in depth in a Super Informed issue, we've linked to it.
146 terms | Last updated May 2026 | Figures verified against current ATO guidance
Quick Reference
Key Rules Every Trustee Must Know
The 22 rules and concepts with the greatest compliance and financial impact. Click any term to jump to its full definition.
A
Account-based pension
A type of retirement income stream paid from a superannuation fund. In pension phase, earnings on assets supporting the pension are generally tax-free. Members must withdraw a minimum percentage of their account balance each year based on their age - ranging from 4% under age 65 to 14% at age 95 and over. There is no maximum withdrawal limit unless the pension is a transition to retirement pension.
Accumulation phase
The phase of superannuation in which a member is building retirement savings. Contributions are made and investment returns are earned. Fund income and gains are taxed at up to 15%. A member remains in accumulation phase until they meet a condition of release and commence a pension or withdraw their benefits.
Actuarial certificate
A certificate issued by a qualified actuary, required when an SMSF uses the proportionate method to calculate exempt current pension income (ECPI). The certificate is needed when the fund has both accumulation and pension interests and assets are not segregated between the two phases. It confirms the proportion of the fund's income and gains that are exempt from tax for the financial year.
Annual return (SMSF)
The SMSF annual return (SAR) is the combined tax and regulatory return lodged with the ATO each year. It covers the fund's financial position, contributions received, income, deductions, and member balances. Standard lodgment due date is 31 October each year; funds lodging through a registered tax agent typically receive an extended deadline. Failure to lodge on time may result in penalties and the fund losing its good standing.
APRA (Australian Prudential Regulation Authority)
The federal regulator responsible for supervising banks, insurance companies, and most superannuation funds - including industry, retail, and corporate funds. APRA does not regulate SMSFs. That role belongs to the ATO. Understanding the distinction matters because APRA-regulated funds operate under different rules and member protections than SMSFs.
Approved SMSF auditor
A registered auditor approved by ASIC to conduct annual audits of self-managed superannuation funds. Every SMSF must have its financial statements and compliance with superannuation law independently audited each year before lodging its annual return. The auditor must be independent of the fund - trustees cannot audit their own fund. SMSF auditors must hold a registration number issued by ASIC.
Arm's length rule Key rule
A fundamental SMSF compliance requirement that all transactions involving the fund must be conducted on the same terms as if the parties were completely unrelated, dealing at fair market value. This applies to rent, loans, purchases, sales, and any other transaction - particularly those involving related parties such as members, their family members, or associated businesses. Breaches can trigger non-arm's length income (NALI) tax consequences or loss of the fund's complying status.
ASIC (Australian Securities and Investments Commission)
Australia's corporate and financial services regulator. ASIC is responsible for registering and approving SMSF auditors and for regulating the professionals who provide services to SMSF trustees - including financial advisers, accountants operating under an AFS licence, and SMSF administrators. ASIC does not directly regulate individual SMSFs.
ATO (Australian Taxation Office)
The federal government agency responsible for regulating self-managed superannuation funds in Australia. The ATO administers the superannuation and tax laws that apply to SMSFs, processes SMSF annual returns, maintains members' transfer balance accounts, monitors compliance, and takes enforcement action against funds or trustees that breach the law. The ATO also publishes guidance for trustees at ato.gov.au.
Administrative penalty (SMSF)
A financial penalty the ATO can impose directly on SMSF trustees, or directors of a corporate trustee, for specified breaches of the superannuation rules without first obtaining a court order. Penalties are measured in penalty units and are generally payable personally by the trustee or director, not from fund assets. They are separate from any tax consequences that may also arise from the breach.
Auditor contravention report (ACR) Key rule
A report an approved SMSF auditor must lodge with the ATO when they identify a reportable contravention during the annual audit. The ACR is generally lodged within 28 days after the audit is completed. Not every breach is reportable, but significant issues such as lending to members, in-house asset breaches, sole purpose test concerns, and repeated compliance failures may need to be reported. The ATO reviews ACRs and decides what action, if any, is appropriate.
Airdrop
A distribution of new cryptocurrency tokens to holders of an existing token, typically as part of a protocol launch, fork, or promotional event. The ATO's position is that where an airdrop is received in connection with providing a service (including simply holding the original token as part of an eligible scheme), the tokens may be treated as ordinary income at the market value at the time of receipt. Where the airdrop has no clear connection to a service, the cost base of the received tokens may be zero. Either way, a new CGT asset is created from the point of receipt, and subsequent disposal of the airdropped tokens will trigger a capital gain or loss. SMSF trustees receiving airdrops must record the token type, quantity, and market value at the date of receipt.
AMIT (Attribution Managed Investment Trust)
A managed investment trust that has elected into the attribution regime under Division 276 of the ITAA 1997. The trust attributes its taxable income (including capital gains, foreign income, and franking credits) directly to unit holders on a fair and reasonable basis, rather than distributing a lump sum that the investor must then characterise. For SMSF trustees, AMITs simplify tax reporting because the fund manager issues an AMIT Member Annual Statement (AMMA) breaking down each component. The cost base of the units is adjusted each year by the difference between the cash distributed and the amount attributed for tax purposes. Most large Australian fund managers now operate under the AMIT regime. See also: widely held managed fund.
B
Bare trust
A simple trust arrangement (also called a holding trust or custodian trust) required when an SMSF borrows money to purchase an asset under a limited recourse borrowing arrangement (LRBA). The bare trustee holds legal title to the asset on behalf of the SMSF while the loan is outstanding - but the SMSF has the beneficial ownership. Once the loan is fully repaid, legal title transfers from the bare trustee to the SMSF.
Binding death benefit nomination (BDBN) Key rule
A legally binding instruction from an SMSF member directing the trustee how to pay the member's superannuation death benefit on their death. Unlike a non-binding nomination, the trustee must follow a valid BDBN. The nomination must comply with the fund's trust deed and superannuation law. Nominees must be dependants or the member's legal personal representative. BDBNs may be lapsing (typically expire after 3 years) or non-lapsing, depending on the trust deed. A BDBN must be reviewed regularly to ensure it remains current and valid.
Bring-forward rule Key rule
A rule that allows eligible members to contribute up to 3 years of non-concessional contributions (NCCs) in a single financial year, rather than being limited to the annual cap. The annual NCC cap is $120,000 in FY2025-26, so the maximum bring-forward amount is $360,000 in a single year. Eligibility depends on age (under 75 at the time of contribution) and total superannuation balance (TSB) at 30 June of the prior financial year. For FY2025-26: full 3-year bring-forward ($360,000) if TSB < $1.76M; 2-year bring-forward ($240,000) if TSB is $1.76M to < $1.88M; no bring-forward (current-year cap only) if TSB is $1.88M to < $2.0M; nil if TSB is $2.0M or above. These thresholds move with the general transfer balance cap and NCC cap and should be verified each year.
Bullion
Gold, silver, platinum, or other precious metals held in physical form, typically as bars or investment-grade coins. SMSFs can hold bullion subject to the standard investment rules. Unlike numismatic coins and other collectables, investment-grade bullion is not automatically classified as a collectable under the SIS Regulations, so the strict collectable rules (storage, insurance, related-party use prohibition) do not automatically apply. However, bullion must still be held in the fund's name, be consistent with the investment strategy, and be valued at market value each year. Trustees should insure physical bullion and document its storage. See also: numismatic coin.
Business real property (BRP)
Real property used wholly and exclusively in a business. SMSFs are specifically permitted to acquire business real property from a related party and to lease it back to a related party - subject to the arrangement being on arm's length commercial terms. This is one of the key exceptions to the general prohibition on acquiring assets from related parties. Residential property does not qualify as BRP, regardless of whether a business is conducted from it.
C
Capital gains tax (CGT) discount - SMSF
A discount that reduces the capital gain recognised when an SMSF sells an asset it has held for more than 12 months. SMSFs in accumulation phase receive a one-third CGT discount, reducing the effective tax rate on a capital gain from 15% to 10%. In pension phase, capital gains on assets supporting the pension are fully exempt from tax, provided the fund's transfer balance account requirements are met.
Carry-forward contributions (catch-up contributions)
A strategy that allows eligible individuals to make concessional contributions above the standard annual cap by using unused cap amounts from up to the 5 prior financial years (available since 1 July 2019). To be eligible, a member's total superannuation balance must be below $500,000 on 30 June of the prior financial year. Unused cap amounts expire after 5 years. This strategy can be particularly useful for individuals who took time out of work or had lower incomes in earlier years.
Collectables and personal use assets
A category of assets that SMSFs may hold but are subject to strict rules. Collectables include artwork, jewellery, antiques, coins, stamps, wine, cars, and boats. The rules require that: the asset must not be used by a related party of the fund; it must not be stored in a related party's private residence; it must be insured in the SMSF's name within 7 days of acquisition; any lease to a third party must be on arm's length terms; and any decision about storage must be documented in writing.
Commutation
The conversion of a superannuation pension (income stream) into a lump sum. A full commutation ends the pension entirely, resulting in a full debit to the member's transfer balance account. A partial commutation reduces the pension balance without ending it. Commutations may be used to manage excess transfer balance amounts, to restructure pension interests, or to redirect funds back to accumulation phase. The tax consequences depend on the type of pension and the member's age.
Condition of release Key rule
A specific event that must occur before a superannuation fund member can legally access their preserved superannuation benefits. Common conditions of release include: reaching age 65; reaching preservation age and retiring; reaching preservation age and commencing a transition to retirement pension; total and permanent disablement; terminal illness (with a medical certificate); and death. Until a condition of release is met, preserved benefits must remain in the superannuation system.
Concessional contributions Key rule
Contributions made with pre-tax money, or personal contributions for which a tax deduction is claimed. These are taxed at 15% inside the fund instead of the member's personal marginal tax rate - a significant advantage for higher income earners. Examples include employer contributions (including the superannuation guarantee), salary sacrifice contributions, and deductible personal contributions. The annual cap is $30,000 in FY2025-26, rising to $32,500 from 1 July 2026. Contributions in excess of the cap are taxed at the individual's marginal rate.
Concessional tax treatment
The favourable tax rates that apply to a complying superannuation fund. In the accumulation phase, fund income is taxed at a maximum of 15% and capital gains on assets held more than 12 months are taxed at an effective 10%. In the retirement (pension) phase, earnings on assets supporting the pension are generally tax-free. A fund that loses its complying status may have its taxable income assessed at 45%. Maintaining compliance with superannuation law is essential to retaining these benefits.
Contravention
A breach of the superannuation or tax laws that govern SMSFs. Contraventions range from minor administrative failures (such as a trustee signing documents late) to serious breaches (such as lending fund money to a member or the fund failing the sole purpose test). Significant contraventions must be reported to the ATO by the fund's auditor. The ATO may respond with education directions, administrative penalties, enforceable undertakings, or in serious cases, trustee disqualification. Read our ATO compliance update →
Contribution caps
The annual limits on how much can be contributed to superannuation before additional tax applies. There are two caps: the concessional contributions cap (for pre-tax contributions) and the non-concessional contributions cap (for after-tax contributions). For FY2025-26: the concessional cap is $30,000 (rising to $32,500 from 1 July 2026) and the non-concessional cap is $120,000 (rising to $130,000 from 1 July 2026). Contributions exceeding either cap trigger excess contributions tax. Read our EOFY contribution strategies guide →
Contribution reserving
A strategy where an SMSF's trust deed allows the fund to accept a contribution in one financial year but allocate it to a member's account in the following year. The contribution counts toward the member's contributions cap in the year it is allocated, not the year it is received. This can be used to manage contributions cap timing at the end of the financial year. Not all trust deeds permit contribution reserving - trustees should confirm their deed allows it before attempting to use this strategy.
Corporate trustee
A company that acts as the trustee of an SMSF, rather than individual members acting as trustees in their personal capacity. All members of the SMSF must be directors of the corporate trustee. A corporate trustee simplifies administration when membership changes (the company remains trustee regardless of who joins or leaves), provides cleaner separation of fund assets from personal assets, and simplifies asset titling. The corporate trustee itself must be registered with ASIC and all directors must be eligible to act.
Crypto assets (SMSF)
Cryptocurrencies and other digital tokens held as investments inside an SMSF. The ATO treats crypto assets as property for CGT purposes - gains and losses are subject to capital gains tax. SMSFs holding crypto must demonstrate that the investment is consistent with the fund's written investment strategy, maintain detailed transaction records, apply appropriate valuations, hold the assets in the fund's name (not commingled with members' personal holdings), and ensure the investment satisfies the sole purpose test.
CHESS (Clearing House Electronic Subregister System)
The ASX's electronic system for settling and registering ownership of listed securities. When an SMSF buys ASX-listed shares, ETFs, or other listed securities, the fund must hold them under its own Holder Identification Number (HIN) on CHESS, not under a member's personal HIN. Holding fund assets under a member's personal HIN does not clearly evidence SMSF ownership and creates both a titling and an audit problem. CHESS registration changes (for example, when shares are transferred in-specie from a member into the fund) are processed via an off-market transfer form and are trackable by the ATO. See also: Holder Identification Number (HIN); off-market transfer.
Central management and control Key rule
One of the residency conditions an SMSF must satisfy to remain an Australian superannuation fund. It requires the fund's strategic and high-level decisions to be made ordinarily in Australia, including decisions about the investment strategy, reserves, and use of assets for member benefits. A temporary overseas absence can be acceptable for up to 2 years, but permanent offshore control can cause the fund to fail the residency rules and become non-complying.
Complying fund
A superannuation fund that has elected to be regulated and has retained its complying status under the superannuation laws. For an SMSF, complying status is essential because it gives the fund access to concessional tax treatment: generally 15% tax on accumulation-phase income and tax-free treatment for eligible retirement-phase pension income. Serious or repeated breaches can lead to a notice of non-compliance and severe tax consequences.
Contribution splitting
An arrangement where a member rolls over part of their splittable concessional contributions to their spouse's super account, either within the same fund or another fund. It is treated as a rollover to the spouse, not a new contribution for them, and it does not reduce the contributions originally counted against the contributing member's concessional cap. The maximum split is generally limited to 85% of taxed splittable contributions, subject to the member's cap and the fund's rules.
Crypto-to-crypto swap
A transaction where one cryptocurrency is exchanged for another (for example, swapping Bitcoin for Ether) without converting to Australian dollars. The ATO treats each swap as a disposal of the first asset and an acquisition of the second, both at market value in AUD at the time. A taxable CGT event is triggered on the disposal side of every swap, even if no dollars change hands. Trustees must record the AUD value of both sides of every swap when it occurs. Failure to track these events means capital gains may be understated and the fund's annual return may be incorrect. See also: crypto assets (SMSF).
D
Death benefit
The superannuation benefit paid from a fund upon the death of a member. A death benefit may be paid as a lump sum or as an income stream to eligible beneficiaries (dependants or the legal personal representative). The tax treatment depends on: the relationship between the beneficiary and the deceased, the components of the benefit (tax-free vs taxable), and the ages of both parties. Trustees must pay out death benefits promptly after a member's death and in accordance with any valid binding death benefit nomination.
Dependant (superannuation definition)
Under superannuation law, a dependant is a person to whom an SMSF trustee can pay a death benefit directly from the fund (rather than through the estate). Dependants include: the member's spouse or de facto partner; the member's children of any age (though tax treatment differs for adult children); any person in an interdependency relationship with the member; and any person who was financially dependent on the member at the date of death. Only dependants can receive a death benefit as a superannuation income stream - non-dependants must receive a lump sum.
Disqualified person
An individual who is legally prohibited from acting as an SMSF trustee, or as a director of an SMSF's corporate trustee. A person is a disqualified person if they have been convicted of an offence involving dishonesty, are an insolvent under administration (such as an undischarged bankrupt), or have been disqualified by the ATO or a court. Operating an SMSF while a disqualified person is a criminal offence. Trustees should check their status if their personal financial circumstances change significantly.
Division 296 tax From July 2026
An additional 15% tax applied to the proportion of superannuation earnings attributable to balances above $3 million, bringing the effective tax rate on those earnings to approximately 30%. Takes effect from 1 July 2026 (FY2026-27 onward). The tax is assessed on realised earnings attributable to the excess balance. The $3 million threshold is not indexed to inflation. Read the Super Informed issue on Division 296 →
Downsizer contribution
A one-off after-tax contribution that allows eligible individuals aged 55 or over to contribute up to $300,000 each (up to $600,000 per couple) into superannuation from the proceeds of selling their home. The property must have been owned by the individual or their spouse for at least 10 years. Downsizer contributions do not count toward the non-concessional contributions cap and can be made regardless of the member's total superannuation balance. Only one downsizer contribution can be made per person per eligible property.
Division 293 tax
An additional 15% tax on concessional contributions for individuals whose Division 293 income plus relevant concessional contributions exceed $250,000 in a financial year. The tax is charged on the lesser of the contributions amount and the amount above the threshold, reducing but not removing the tax concession on super contributions. The ATO assesses the individual, who may pay personally or use a release authority to pay from super.
Dividend Reinvestment Plan (DRP)
An arrangement offered by some ASX-listed companies that allows shareholders to receive new shares instead of a cash dividend. Inside an SMSF, each DRP reinvestment is treated as a separate share acquisition: it has its own acquisition date, cost base (equal to the issue price used by the company), and franking credit allocation. Because the DRP creates a new CGT parcel on each dividend date, trustees holding shares in companies with DRPs must maintain a separate parcel record for each reinvestment. Failure to track DRP parcels correctly leads to cumulative CGT record-keeping errors that compound over years and are difficult to reconstruct at audit. See also: parcel identification.
E
Electronic service address (ESA)
An identifier used by SMSFs to receive employer contributions and rollovers electronically via the SuperStream system. An ESA is provided by a SuperStream messaging provider (such as an SMSF administration platform or specialist provider) and must be registered with the ATO. Without a valid ESA, an SMSF cannot receive employer SG contributions via SuperStream and cannot receive incoming rollovers from other superannuation funds.
ETF (exchange-traded fund)
A managed investment fund that is listed and traded on a recognised stock exchange such as the ASX. ETFs allow SMSF trustees to invest in a diversified basket of assets - including Australian shares, international shares, bonds, or property - through a single investment. Popular in SMSFs due to low management costs, intraday liquidity, and price transparency. ETFs are straightforward to value (at market price) and are not subject to the in-house asset restrictions.
Event-based reporting
The ATO's reporting system requiring SMSFs to notify the ATO of events that affect a member's transfer balance account. Reportable events include: commencing a retirement phase pension, fully or partially commuting a pension, and certain structured settlement contributions. From 1 July 2023, all SMSFs must report transfer balance account events within 28 days after the end of the quarter in which the event occurred. Timely reporting is important to avoid excess transfer balance tax.
Exempt current pension income (ECPI) Key rule
The portion of an SMSF's income and capital gains that is exempt from income tax because it is attributable to assets supporting retirement phase pension interests. Under the segregated method, all income from assets set aside to support pensions is fully exempt - no actuarial certificate needed. Under the proportionate method, the exempt proportion is calculated using an actuarial certificate based on the ratio of pension interests to total fund assets. Correctly claiming ECPI is one of the most significant tax benefits available to SMSFs in pension phase.
Education direction
A written ATO direction requiring an SMSF trustee or director of a corporate trustee to complete an approved education course and provide evidence of completion. The ATO can use education directions where it believes a trustee has breached the super rules and needs to improve their understanding of their obligations. Failure to comply can trigger further action, including penalties.
Enduring power of attorney (EPA)
A legal appointment that allows another person to make financial and legal decisions for an individual if they lose capacity. In an SMSF, an EPA is a key succession planning tool because a member's legal personal representative or attorney can be appointed as trustee, or director of the corporate trustee, in place of the member. The precise document name and requirements differ by state and territory, so legal advice is important.
Enforceable undertaking
A written undertaking given by an SMSF trustee to the ATO, and accepted by the ATO, setting out how a compliance breach will be stopped, rectified, reported, and prevented from recurring. It is usually initiated by the trustee as a remediation pathway. If the trustee substantially fails to comply with the undertaking, the ATO may take further enforcement action.
Excess concessional contributions Key rule
Concessional contributions above the member's annual concessional cap, including any valid carry-forward cap amounts. The excess is included in the member's assessable income and taxed at their marginal rate, with a 15% tax offset for contributions tax already paid by the fund. The member can generally elect to release up to 85% of the excess amount from super; unreleased excess concessional contributions may also count toward the non-concessional cap.
Excess non-concessional contributions
Non-concessional contributions above the member's annual or bring-forward cap. The ATO generally issues a determination showing the excess and an associated earnings amount. The member can release the excess plus 85% of the associated earnings, with the full associated earnings included in personal assessable income and taxed at marginal rates. If the excess is not released, excess non-concessional contributions tax can apply at the top marginal rate.
Excess transfer balance
The amount by which a member's transfer balance account exceeds their personal transfer balance cap, plus notional earnings that accrue on the excess until it is resolved. The member generally needs to commute the excess from retirement phase, either voluntarily or after an ATO determination and commutation authority. Excess transfer balance tax applies to the notional earnings at 15% for a first breach and 30% for later breaches.
Employee Share Scheme (ESS)
A scheme under which an employee receives shares or rights to shares in their employer, or a related company, as part of their remuneration. ESS interests have their own income tax treatment before any SMSF transfer. The taxing point depends on whether the scheme is taxed upfront or uses a deferred taxing point. Trustees considering an in-specie transfer of ESS shares into their SMSF must confirm the personal ESS tax position with a registered tax agent first, because the ESS income inclusion rules and the in-specie CGT event can interact in unexpected ways. The cost base of ESS shares also differs from market-purchased shares. See also: in-specie transfer.
ESIC (Early Stage Innovation Company)
A qualifying start-up company that meets the ATO's innovation and early stage tests, investments in which may entitle the investor to a 20% non-refundable tax offset and modified CGT treatment (a 10-year exemption on gains for shares held between 1 and 10 years, with a CGT discount applying). An SMSF can invest in an ESIC, but the tax offset is available to the fund in addition to the standard SMSF tax rates. Trustees should note that an investment in an ESIC controlled by a related party may also raise in-house asset concerns, and the ESIC eligibility tests must be met at the time of investment. Specialist advice is recommended given the complexity of both the ESIC rules and their interaction with SMSF compliance requirements.
Exchange custody
The arrangement where a centralised cryptocurrency exchange holds the private keys to a user's crypto assets on their behalf, meaning the user does not directly control the underlying tokens. For SMSF trustees, exchange custody is only appropriate where the exchange account is in the fund's name (not a member's personal account), ownership is clearly documented, and the exchange maintains adequate audit evidence such as transaction statements and balances. Holding SMSF crypto through a member's personal exchange account does not demonstrate fund ownership and conflates personal and fund assets. Trustees should also be aware of the counterparty risk: if the exchange fails or is hacked, recovery may be difficult or impossible. See also: self-custody; wallet register.
F
First Home Super Saver Scheme (FHSSS)
A scheme that allows eligible first home buyers to make voluntary concessional or non-concessional contributions to super and later apply to the ATO to release eligible amounts, plus deemed associated earnings, for a home deposit. The maximum releasable contribution amount is $50,000 per person for determinations requested from 1 July 2022. The ATO administers determinations and releases; the fund does not release amounts directly without an ATO authority.
Foreign currency asset
An asset denominated in a foreign currency, including international shares, foreign-currency bank accounts, and offshore managed fund units. When an SMSF acquires or disposes of a foreign currency asset, the cost base and proceeds must be converted to Australian dollars at the relevant exchange rate, and any gain or loss attributable purely to the movement in the exchange rate (a forex gain or loss) is recognised separately under the foreign currency provisions (Division 775 of the ITAA 1997). This means an SMSF can make a taxable forex gain even if the underlying asset has not moved in price in its home currency. Trustees holding international ETFs, direct foreign shares, or foreign-currency deposits should ensure their administration and tax records capture exchange rates at both acquisition and disposal dates. See also: foreign income tax offset.
Foreign income tax offset (FITO)
A tax offset available to an SMSF that has paid foreign income tax, such as withholding tax deducted by an overseas country on dividends or interest from foreign investments. The offset reduces the fund's Australian tax liability dollar for dollar, up to the Australian tax that would otherwise apply to the same income. For example, if a foreign country withholds 15% on a dividend and the SMSF would otherwise pay 15% Australian tax on that income, the FITO can reduce the Australian tax to nil. Trustees holding international shares should ensure foreign withholding tax is separately identified in distribution statements so it can be correctly claimed in the annual return.
Franking credits
Tax credits attached to franked dividends paid by Australian companies. An SMSF includes both the cash dividend and the franking credit in assessable income, then uses the credit as a tax offset against the fund's tax liability. Where credits exceed the fund's tax payable, the excess may be refunded to the fund, which can be especially valuable for SMSFs with retirement-phase income.
Franking credit refund
A cash refund paid by the ATO to a complying superannuation fund when the fund's total franking credit tax offsets exceed the fund's income tax liability for the year. Because SMSFs in accumulation phase pay tax at 15% while franking credits are typically attached at the 30% corporate rate, the fund often has excess credits that are refunded. In pension phase, where investment earnings are tax-free, the full franking credit is refundable. This refund mechanism is one of the key tax advantages of holding Australian shares inside an SMSF, and can significantly boost overall after-tax returns. The fund must lodge its annual return to receive the refund. See also: franking credits; 45-day holding period rule.
G
Government co-contribution
A government incentive for low-to-middle income earners who make personal after-tax contributions to superannuation. The government contributes $0.50 for every $1 of personal contribution, up to a maximum co-contribution of $500. Eligibility and the amount received are income-tested - the full benefit applies below the lower income threshold and phases out completely at the upper threshold. Both thresholds are indexed annually; confirm current figures with the ATO or your accountant before acting.
H
Hard fork
A permanent divergence in a blockchain's protocol that creates two separate chains from a common history. Holders of the original token at the time of the fork generally receive an equivalent amount of the new token on the forked chain. The ATO's position is that tokens received through a hard fork are new CGT assets, acquired at the time of the fork. Where the received tokens are not considered to have been received in exchange for anything, the cost base of the new tokens is zero. Subsequent disposal of forked tokens triggers a capital gain or loss calculated from that zero cost base. SMSF trustees should record the type and quantity of any tokens received through a hard fork, the date received, and the market value at that time. See also: crypto assets (SMSF).
Holder Identification Number (HIN)
A unique identifier assigned to a participant in the CHESS settlement system, used to register ownership of ASX-listed securities. Each SMSF should have its own HIN, separate from any HIN held by individual members personally. All SMSF share trades must be settled through the fund's HIN, and all existing holdings must be registered under it. Holding SMSF shares under a member's personal HIN, even informally or temporarily, means those assets are not clearly titled as fund assets. This can create difficulties at audit and may require an in-specie transfer to correct. A fund's HIN is established through the SMSF's brokerage account. See also: CHESS; in-specie transfer.
I
In-house assets Key rule
Assets of an SMSF that are investments in, loans to, or leases to a related party of the fund. In-house assets must not exceed 5% of the fund's total assets (by market value) at any time during the financial year. Trustees who breach the 5% limit must develop and implement a plan to bring the fund back into compliance. There are important exceptions - for example, business real property leased to a related party on arm's length terms is excluded from the in-house asset rules.
Individual trustee
A structure where the members of an SMSF act directly as trustees in their personal capacity, rather than through a company. All members must be trustees and all trustees must be members. A single-member SMSF with individual trustees requires a second individual trustee who is not a member (typically a family member or associate). When membership changes, all fund assets must be retitled in the new trustee names - which can be administratively burdensome compared to a corporate trustee structure.
Interdependency relationship
A relationship between two people (who need not be a couple or related) that gives rise to dependant status under superannuation law. The relationship exists where the two people: live together; one or both provides the other with financial support; and one or both provides the other with domestic support and personal care. A person in an interdependency relationship with a deceased SMSF member can receive a death benefit directly from the fund as a dependant, including as an income stream.
Investment strategy Key rule
A written document that sets out how an SMSF's assets will be invested to meet the fund's objectives and the retirement needs of its members. Trustees are legally required to formulate, implement, and regularly review the fund's investment strategy - the ATO expects this to happen at least annually, or whenever the fund's circumstances change significantly. The strategy must consider: the risk and return of investments, diversification, liquidity, the fund's ability to pay benefits and expenses as they fall due, and the insurance needs of members. A generic or boilerplate document may not satisfy the ATO's requirements.
In-house asset reduction plan
A written plan that SMSF trustees must prepare and begin implementing when the fund's in-house assets exceed 5% of total assets at the end of a financial year. The plan must set out how the trustees intend to reduce in-house assets to 5% or below by the end of the following year. This is a statutory requirement under s82 of the SIS Act. It is not optional and is not remedied simply by acknowledging the breach. The auditor will check whether a plan exists and is being followed. Maintaining in-house assets above 5% without a compliant reduction plan is a reportable contravention. See also: in-house assets.
In-specie transfer
The transfer of an asset from one owner to another without a cash sale. Common examples include moving personally held listed shares into an SMSF, or paying a member's benefit using an asset rather than cash. In-specie transfers into an SMSF are treated as related party acquisitions. Listed securities are an express exception to the general prohibition on acquiring assets from related parties, but the transfer must be at market value on the date of transfer. A CGT event is triggered for the transferring member personally at that time, and the fund's cost base resets to the transfer date market value. The transfer may also count as a contribution if the fund does not pay market value in cash, so contribution caps must be checked. See also: off-market transfer.
Insurance inside an SMSF
Life, total and permanent disability, or income protection insurance held by an SMSF for one or more members. SMSF trustees must consider whether insurance should be held for members as part of the fund's investment strategy, but cover is not automatic as it may be in some APRA-regulated funds. Premiums are paid by the fund and may be deductible depending on the policy type, but trustees still need to assess cost, terms, ownership, and whether the cover remains appropriate.
L
Legal personal representative (LPR)
The executor named in a deceased member's will, or the administrator of the estate if there is no will. An SMSF's death benefit can be paid to the LPR, who then distributes it in accordance with the member's will and the laws of the estate. Note that paying a death benefit to the LPR does not guarantee it reaches a specific person - the terms of the will and the rules of intestacy (if there is no will) govern how the estate is ultimately distributed.
Limited recourse borrowing arrangement (LRBA)
An arrangement that allows an SMSF to borrow money to purchase a single acquirable asset (such as a property or listed shares), held separately in a bare trust during the loan period. The lender's recourse is limited to the asset in the bare trust - the SMSF's other assets are protected in the event of default. Once the loan is fully repaid, legal title to the asset transfers from the bare trust to the SMSF. Loans from related parties must meet ATO safe harbour terms to avoid non-arm's length income issues.
Listed investment company (LIC)
A closed-ended investment vehicle listed on the ASX that invests in a portfolio of assets, typically listed equities. Unlike an ETF, a LIC has a fixed number of shares on issue and trades at a price that may be at a premium or discount to the underlying net tangible assets (NTA) per share. For SMSF purposes, LICs are treated like any other ASX-listed security: valued at market price, not subject to the in-house asset rules (unless the LIC is a related party), and straightforward to account for. Dividends, including franking credits, are treated the same as dividends from direct share holdings. See also: listed securities; ETF (exchange-traded fund).
Listed securities
Shares, units, or other financial instruments traded on a recognised stock exchange such as the ASX. SMSFs commonly hold Australian and international listed securities as part of a diversified investment portfolio. Listed securities are valued at their market price, making compliance reporting straightforward. They are not generally subject to the in-house asset restrictions (unless the securities are in a related party entity). Dividends and distributions received by the fund are treated as ordinary income.
Lapsing BDBN
A binding death benefit nomination that expires after a set period, commonly 3 years, if it is not renewed. Once it lapses, the trustee may regain discretion over how the death benefit is paid unless another valid nomination applies. Whether lapsing nominations are available, and the formal signing and witnessing requirements, depends on the SMSF trust deed and applicable law.
Lump sum benefit
A superannuation benefit paid as a single payment rather than as a pension or other income stream. Members who have met a condition of release may take all or part of their unrestricted benefits as a lump sum. For members aged 60 or over receiving benefits from a taxed fund, lump sums are generally tax-free, but tax can apply to younger members or to death benefits paid to non-tax-dependants.
M
Managed funds
Pooled investment vehicles managed by a professional fund manager on behalf of investors. SMSF trustees may invest in managed funds as part of a diversified strategy. Investors typically receive units in the fund rather than direct ownership of the underlying assets. Returns are paid as distributions or reinvested. Examples include unlisted unit trusts, listed investment companies (LICs), and infrastructure funds. Managed funds can provide access to asset classes that may be difficult for an SMSF to access directly.
Member
An individual whose superannuation benefits are held in an SMSF. In an SMSF, all members must be trustees (if individual trustees are used) or directors of the corporate trustee. An SMSF can have up to 6 members from 1 July 2021. Members contribute to and accumulate benefits in the fund, and are entitled to receive benefits upon meeting a condition of release. Each member's interest in the fund is tracked separately.
Minimum pension drawdown Key rule
The minimum amount that must be withdrawn from an account-based pension each financial year, expressed as a percentage of the pension account balance as at 1 July (or at commencement if the pension starts part-way through the year). The minimum percentages by age are: under 65: 4%; ages 65 to 74: 5%; ages 75 to 79: 6%; ages 80 to 84: 7%; ages 85 to 89: 9%; ages 90 to 94: 11%; age 95 and over: 14%. Failure to meet the minimum drawdown requirement means the pension fails to meet the standards and the fund loses the ECPI tax exemption for that year.
Market valuation Key rule
The process of determining the current market value of SMSF assets using objective and supportable evidence. SMSF trustees must value fund assets at market value when preparing accounts and statements, calculating member balances, reporting in the annual return, claiming ECPI, and testing rules such as the in-house asset limit. Listed securities can usually be valued using market prices; property, unlisted investments, collectables, and complex assets may require stronger evidence or an independent valuation.
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N
Non-arm's length expenditure (NALE)
Expenditure incurred by an SMSF that is below the amount that would be expected in an arm's length dealing - for example, a related party providing services to the fund for free or below market rate. NALE rules can cause the fund's ordinary and statutory income to be taxed at the highest marginal rate (45%) rather than the standard 15%. These rules apply to both specific income related to the low-cost service and, in some circumstances, to the fund's general income. Trustees should be cautious about receiving any discounted services from related parties.
Non-arm's length income (NALI)
Income derived by an SMSF from a transaction or scheme where the parties are not dealing at arm's length, and the income received by the fund is greater than it would have been in an arm's length dealing. NALI is taxed at the highest marginal rate (45%) rather than the standard 15% fund tax rate. Common examples include rent received from a related party above market value, or dividends from a private company controlled by a member that are inflated above what would be paid to an unrelated shareholder.
Non-binding nomination
A nomination made by an SMSF member indicating their preferred beneficiary for their superannuation death benefit. Unlike a binding death benefit nomination, a non-binding nomination is not legally enforceable - the trustee has discretion to determine how the death benefit is actually paid, though the trustee must take the nomination into account. In an SMSF where trustees and members are often the same people, succession planning for trustee control (via a corporate trustee structure or enduring power of attorney) is equally important alongside the nomination itself.
Non-concessional contributions (NCCs) Key rule
After-tax contributions made to a superannuation fund from money on which personal income tax has already been paid. NCCs are not included in the fund's assessable income and are not taxed within the fund. The annual NCC cap is $120,000 in FY2025-26, rising to $130,000 from 1 July 2026. Members with a total superannuation balance at or above the general transfer balance cap ($2.0M in FY2025-26) are not permitted to make NCCs. Excess NCCs are subject to significant tax penalties. Subject to the bring-forward rule for eligible members.
Non-complying fund
A superannuation fund that has lost its complying status because of serious or repeated breaches of the superannuation laws or because it fails a fundamental requirement such as residency. The tax consequences are severe: a non-complying fund can lose concessional tax treatment and may be taxed at the highest marginal rate on a broad base that can include previously tax-concessionally accumulated assets. Trustees should seek professional advice immediately if the ATO raises non-compliance concerns.
Non-lapsing BDBN
A binding death benefit nomination intended to remain in force until the member revokes or replaces it, instead of expiring after a fixed period. Not all SMSF deeds allow non-lapsing BDBNs, and validity depends heavily on the deed's wording and formal requirements. Even where a nomination does not lapse, it should be reviewed after major life events such as marriage, divorce, the birth of children, or the death of a beneficiary.
Non-widely held unit trust
A unit trust that does not make its units widely available to the public and is typically controlled by a small group of investors, commonly a family trust or private investment vehicle. If a member or their associates control the trust, the SMSF's investment is likely to be classified as an in-house asset, subject to the 5% limit. Regulations 13.22C and 13.22D provide conditions under which an investment in a related trust can avoid in-house asset treatment, but the conditions are strict and ongoing. The trust generally cannot borrow, cannot lease most assets to related parties, cannot hold interests in other entities, and cannot hold assets that would breach SMSF rules if held directly. If a disqualifying event occurs, the exclusion can be lost. Specialist advice is essential. See also: widely held managed fund; in-house assets.
Notice of intent to claim a deduction
A written notice a member must give their super fund before claiming a personal tax deduction for a super contribution. The notice must be valid, in the approved form, and given before the earlier of the day the member lodges their tax return for the contribution year or the end of the following financial year. The fund must acknowledge the notice before the member can claim the deduction.
Numismatic coin
A coin whose value comes primarily from its rarity, age, historical significance, or condition rather than its metal content. Numismatic coins held by an SMSF are classified as collectables under the SIS Regulations and are subject to the strict collectable rules: they must not be used by a related party, must not be stored in a related party's private residence, must be insured in the fund's name within 7 days of acquisition, and storage must be documented in writing. This is distinct from investment-grade bullion coins (such as the Australian Gold Kangaroo), which are held for their precious metal value and are not automatically treated as collectables. If there is doubt about whether a coin qualifies, the conservative approach is to apply the collectable rules. See also: bullion; collectables and personal use assets.
O
Off-market transfer
A transfer of ASX-listed securities between two parties that is processed directly through CHESS, without going through the exchange's normal on-market trading system. Off-market transfers are the standard mechanism for in-specie transfers of listed shares into or out of an SMSF. The process involves completing an off-market transfer form and lodging it with the relevant share registry or broker, which then processes the CHESS registration change from the transferor's HIN to the fund's HIN. The transfer must be documented at market value on the transfer date (typically the ASX closing price) and the record of the transfer must be retained for audit purposes. See also: in-specie transfer; CHESS; Holder Identification Number (HIN).
Ordinary time earnings (OTE)
The earnings base used to calculate superannuation guarantee contributions. OTE generally means the amounts an employee earns for ordinary hours of work and commonly includes base salary, commissions, shift loadings, and some allowances, but not overtime. From 1 July 2025, the SG rate is 12% of OTE, so understanding OTE helps SMSF members check whether employer contributions have been calculated correctly.
P
Payday super From July 2026
The government's reform requiring employers to pay superannuation guarantee contributions to their employees' nominated super funds at the same time as wages are paid, rather than quarterly (as currently required). Legislated to take effect from 1 July 2026. For SMSF members who receive employer SG contributions, this will result in more frequent, smaller contribution receipts - requiring trustees to ensure their fund's bank account, ESA, and administration processes are set up to handle more regular transactions. Read the Super Informed issue on Payday Super →
Pension phase
The phase in which a member has commenced a retirement income stream (pension) from their superannuation fund. In pension phase, fund earnings and capital gains attributable to assets supporting the pension are generally exempt from income tax, subject to the transfer balance cap rules. Members in pension phase must meet the annual minimum drawdown requirements. A member can hold both accumulation and pension phase interests within the same SMSF simultaneously.
Personal deductible contribution
A personal (after-tax) contribution made to superannuation by an individual who then claims a tax deduction for that contribution, effectively converting it into a concessional contribution. To claim the deduction, the individual must lodge a notice of intent to claim a deduction with their fund before lodging their tax return and before certain other events occur. Once the deduction is claimed, the 15% contributions tax applies within the fund, and the amount counts toward the concessional contributions cap.
Preservation
The requirement that most superannuation benefits must remain within the superannuation system until a member meets a condition of release. Preserved benefits (which make up the majority of most members' super) cannot be accessed until the appropriate conditions are met. Restricted non-preserved benefits can be accessed in limited circumstances such as leaving employment. Unrestricted non-preserved benefits can be accessed at any time. Contributions made since 30 June 1999 are generally preserved.
Preservation age Key rule
The minimum age at which a superannuation fund member can access their preserved benefits, subject to meeting a condition of release. For individuals born on or after 1 July 1964, the preservation age is 60. For those born before 1 July 1964, it ranges from 55 to 59 depending on date of birth. Reaching preservation age alone does not give a member access to their superannuation - they must also meet a condition of release such as retiring from the workforce or commencing a transition to retirement pension.
Proportionate method
One of two methods available to SMSFs for calculating exempt current pension income (ECPI). Under the proportionate method, an actuarial certificate is obtained each year confirming what proportion of the fund's assets and income is exempt from tax - based on the ratio of pension-phase assets to total fund assets. This method is required when the fund has both accumulation and pension phase interests and assets are not segregated between the two phases.
Parcel identification
The process of identifying which specific acquisition parcel of a listed security is being disposed of when a fund sells shares it has purchased on multiple occasions at different prices and dates. When a fund holds multiple parcels of the same security, it must identify which parcel is being sold rather than using an average cost across all parcels. The most common approach is first-in first-out (FIFO), but specific identification of a parcel is also permitted if it is clearly documented at the time of sale. This matters because different parcels can have different cost bases and different acquisition dates, directly affecting whether the one-third CGT discount applies and the size of any capital gain or loss. Trustees holding shares purchased across many years, or with significant DRP accumulations, should ensure their administration platform or adviser is tracking parcel-level records. See also: Dividend Reinvestment Plan (DRP).
Part 8 associate
A person or entity treated as associated with an SMSF member under Part 8 of the SIS Act. Part 8 associates can include relatives, business partners, companies and trusts controlled by members or their associates, and other closely connected entities. The concept matters because transactions involving Part 8 associates can trigger related party, in-house asset, acquisition, and arm's length restrictions.
Private credit
A loan or debt investment made directly by an SMSF to a borrower, rather than through a bank or publicly traded bond market. Private credit investments include direct loans to businesses, peer-to-peer lending arrangements, mortgage lending, and private debt funds. For SMSF trustees, the key compliance considerations are: the loan must be on arm's length terms (market interest rate, commercial documentation, and genuine repayment terms); lending to a member or related party of the fund is generally prohibited; and a private loan to an unrelated borrower that is not performing may need to be recognised as impaired in the fund's accounts. The loan must be documented with a formal agreement, and interest received must flow to the fund's dedicated bank account. Trustees should also consider the illiquidity of private credit and its effect on the fund's ability to meet pension payments and other obligations. See also: in-house assets; arm's length rule.
Q
Qualified independent valuer
A person with the qualifications, experience, and independence necessary to provide a reliable market valuation of an SMSF asset. The ATO does not prescribe a single mandatory qualification, but expects the valuer to have relevant expertise for the asset being valued (for example, a certified practising valuer for real property) and no connection to the fund or its members that could affect independence. An independent valuation is expected or required in several circumstances: when a property is first acquired, when any asset is acquired from or sold to a related party, when pension phase reporting affects the transfer balance account, and when the auditor requests one. Using a related party to conduct a valuation, or relying on an informal estimate, does not meet the ATO's standard. See also: market valuation.
R
Reversionary pension
A superannuation pension that is structured to automatically continue to a nominated beneficiary (the reversionary beneficiary) upon the death of the primary pensioner, without being commuted and recommenced. The reversionary beneficiary must be a dependant. The continued pension creates a credit in the reversionary beneficiary's transfer balance account, with a 12-month grace period before the full value of the pension is counted against their personal transfer balance cap.
Rollover
The transfer of a superannuation benefit from one superannuation fund to another (including into or out of an SMSF), without the funds being paid as a benefit to the member. Rollovers are processed electronically via the SuperStream system. An SMSF must have a valid ESA to receive incoming rollovers. Rollovers do not trigger tax and do not count as contributions. Rollovers out of an SMSF that is in pension phase may trigger a transfer balance account debit.
Rectification direction
A written ATO direction requiring an SMSF trustee or director of a corporate trustee to take specified action to fix a breach within a stated timeframe and provide evidence of compliance. Rectification is aimed at correcting the practical consequences of a contravention and reducing the chance of recurrence. Failing to comply can be a strict liability offence and may lead to further ATO action.
Residency requirements (SMSF) Key rule
The conditions an SMSF must meet at all times during the financial year to be an Australian superannuation fund and receive concessional tax treatment. The fund must be established in Australia or hold an Australian asset, have central management and control ordinarily in Australia, and satisfy the active member test. If an SMSF fails residency, it can become non-complying and may need to roll benefits to another regulated fund and wind up.
Retirement (superannuation definition)
A condition of release with a specific legal meaning. A member who has reached preservation age is generally retired if an employment arrangement has ended and they do not intend to work again for 10 or more hours per week. For a member aged 60 or over, ceasing an employment arrangement can also create access to benefits connected with that condition of release. Reaching age 65 is a separate unrestricted condition of release.
S
Salary sacrifice
An arrangement between an employee and their employer where the employee agrees to give up a portion of their pre-tax salary in exchange for additional superannuation contributions made on their behalf. The sacrificed amount is treated as a concessional contribution: it is taxed at 15% within the fund rather than at the individual's marginal tax rate. Salary sacrifice is most effective for individuals in higher tax brackets. The sacrificed amount counts toward the concessional contributions cap.
Safe harbour terms (LRBA)
ATO-specified benchmark loan terms for limited recourse borrowing arrangements between an SMSF and a related party. If a related-party LRBA meets all safe harbour conditions - including the prescribed interest rate, loan term, and loan-to-value ratio - the ATO will accept the arrangement as being conducted on arm's length terms. For real property, the safe harbour benchmarks require an interest rate equal to the RBA indicator lending rate for standard variable housing loans plus a margin, a maximum 70% LVR, and a loan term of no more than 15 years. For listed shares and units in listed managed investment schemes, the rate is the RBA indicator lending rate for standard variable housing loans plus a different margin, a maximum 50% LVR, and a loan term of no more than 7 years. A related-party LRBA that falls outside these benchmarks is not automatically non-compliant, but the trustee must be able to demonstrate independently that the terms are genuinely arm's length, or the income and gains from the asset may be taxed as non-arm's length income. See also: limited recourse borrowing arrangement (LRBA); non-arm's length income (NALI).
Segregated method
One of two methods for calculating exempt current pension income (ECPI) in an SMSF. Under the segregated method, specific fund assets are designated as segregated current pension assets used solely to support retirement phase pensions. All income and capital gains from those assets are fully exempt from tax - no actuarial certificate is required. The segregated method is not available to a fund that has any member with a total superannuation balance exceeding $1.6 million on 30 June of the prior financial year (this threshold remains at $1.6M and has not been indexed, even as the transfer balance cap has risen).
Self-managed superannuation fund (SMSF)
A private superannuation fund regulated by the Australian Taxation Office with up to 6 members, where all members are either individual trustees or directors of the corporate trustee. SMSFs give trustees direct control over the fund's investments, strategy, and administration. Trustees bear full legal responsibility for ensuring the fund complies with all superannuation and tax laws. As at late 2025, there are over 663,000 SMSFs in Australia, holding approximately $1.06 trillion in assets. Establishing and running an SMSF involves significant ongoing legal, administrative, and fiduciary obligations.
Six-member rule
From 1 July 2021, the maximum number of members permitted in an SMSF increased from 4 to 6. All members must be trustees (or directors of the corporate trustee). The expanded limit allows larger family groups to consolidate retirement savings within a single fund structure, potentially reducing administration costs and enabling more coordinated investment and estate planning strategies. A corporate trustee is strongly recommended when a fund has more than 4 members.
SMSF establishment
The process of setting up a self-managed superannuation fund. Key steps include: preparing and executing a trust deed; appointing trustees or establishing a corporate trustee; registering the fund with the ATO to obtain an ABN and TFN; opening a dedicated SMSF bank account; electing to be regulated by the ATO; and developing an investment strategy. All assets must be held in the fund's name (not the personal names of members), and the fund must be operational before it can receive contributions or rollovers.
Sole purpose test Key rule
A fundamental compliance requirement under the Superannuation Industry (Supervision) Act 1993 (SIS Act) stating that an SMSF must be maintained solely for the purpose of providing retirement benefits to its members, or to their dependants if a member dies before retirement. The test is broadly applied and looks at both the purpose and the effect of the fund's activities and investments. Failure can result in loss of tax concessions and civil or criminal penalties for trustees.
Spouse contribution
A non-concessional contribution made by one spouse into the superannuation account of their other spouse (including de facto partners). The contributing spouse may be entitled to a tax offset of up to $540 if the receiving spouse's income is below $37,000, with the offset phasing out completely once the receiving spouse's income reaches $40,000. These thresholds have not been indexed for many years - confirm current figures with the ATO before acting. The contribution counts toward the receiving spouse's non-concessional contributions cap and can be a useful strategy for splitting retirement savings more evenly.
Super Fund Lookup
The ATO's publicly available online register of all superannuation funds in Australia, including SMSFs. Employers, rollovers, and individuals can use Super Fund Lookup to verify that an SMSF is registered, regulated by the ATO, and has a status of complying before directing contributions or rollovers to it. An SMSF must appear on Super Fund Lookup as a complying fund to legally receive contributions. Trustees can also use it to confirm the fund's ABN and other registration details are current.
Superannuation guarantee (SG)
The compulsory minimum percentage of an employee's ordinary time earnings that employers are required to contribute to a complying superannuation fund on behalf of eligible employees. The SG rate is 11.5% in FY2024-25, increasing to 12% from 1 July 2025. For SMSF members who are employees, SG contributions are received by the fund via SuperStream and count toward the concessional contributions cap. Self-employed individuals are not required to make SG contributions but may choose to make personal concessional contributions.
SuperStream
The ATO's mandatory electronic system for processing superannuation contributions and rollovers. SuperStream standardises the format and delivery of contribution data and payments, requiring all transactions to be sent electronically. For SMSFs, SuperStream compliance requires a compliant bank account and a valid electronic service address (ESA). SuperStream applies to all employer SG contributions and to rollovers between superannuation funds. The system allows the ATO to monitor contribution flows in near real time.
Self-custody
Holding cryptocurrency assets using a wallet where the fund directly controls the private keys, rather than relying on a third-party exchange or custodian. Self-custody can take the form of a hardware wallet or software wallet. The wallet must be established and maintained in the fund's name, not a member's personal wallet, and the private key and seed phrase must be securely stored and documented as a fund record. Using a member's personal wallet for SMSF crypto is a common compliance failure: it conflates personal and fund holdings and creates audit evidence problems. The fund's wallet register should record all wallet addresses and the assets held at each address. See also: exchange custody; wallet register.
SIS Act (Superannuation Industry (Supervision) Act 1993)
The main federal law governing Australian superannuation funds, including SMSFs. The SIS Act sets out core trustee duties, fund structure rules, investment restrictions, contribution and benefit standards, enforcement powers, and penalties. It operates alongside the SIS Regulations, tax legislation, ATO guidance, the fund's trust deed, and general trust law.
Small business CGT concessions (superannuation)
Special CGT concessions that can allow eligible small business owners to contribute amounts to super outside the ordinary concessional and non-concessional caps. The small business retirement exemption has a $500,000 lifetime limit per individual, while amounts connected with the 15-year exemption can be contributed up to the indexed lifetime CGT cap. These amounts must meet strict eligibility and election requirements and can still affect total superannuation balance and transfer balance planning.
Staking rewards
Cryptocurrency tokens received by a holder as a return for locking up (staking) their tokens to participate in a proof-of-stake blockchain's consensus mechanism. The ATO's position is that staking rewards received by an SMSF are ordinary income, assessed at the Australian dollar market value of the tokens at the time they are received. The received tokens then have a cost base equal to the value at which they were brought to account as income. On subsequent disposal, any movement in value from that cost base creates a capital gain or loss. Trustees must maintain records of each staking reward: the date received, the token type, the quantity, and the AUD market value at receipt. See also: crypto assets (SMSF).
Structured settlement contribution
A contribution made from an eligible personal injury payment, structured settlement, or court order where the member validly elects to exclude the amount from their non-concessional contributions cap. The election generally needs to be provided to the fund before or when the contribution is made, and the fund reports the contribution to the ATO. These contributions can be large and documentation is critical before acceptance.
T
Tax-free component
The portion of a superannuation benefit that is not subject to tax when paid to a member or beneficiary, regardless of the recipient's age. The tax-free component arises primarily from non-concessional (after-tax) contributions and certain other amounts. When a benefit is paid, the fund calculates the tax-free and taxable components based on the proportion of each in the member's total interest. The tax-free component is generally not subject to tax even when paid to non-dependants.
Taxable component
The portion of a superannuation benefit that may be subject to tax when paid, depending on the recipient's age and circumstances. The taxable component arises from concessional contributions, employer contributions, and fund earnings. When paid to a member or beneficiary aged 60 or over from a taxed source, the taxable component is generally tax-free. When paid to someone under 60, the taxed element is taxed at a maximum of 20% (plus Medicare levy), with a 15% tax offset applying. When paid to non-dependants as a death benefit, tax may apply regardless of age.
Total superannuation balance (TSB) Key rule
The total value of all of an individual's superannuation interests across all funds, measured on 30 June each year. The ATO calculates TSB based on annual return data. A member's TSB determines eligibility for: the bring-forward rule, carry-forward contributions, the non-concessional contributions cap, the government co-contribution, and the segregated ECPI method. TSB is available via myGov (ATO online services). For SMSFs, the TSB may not be updated by the ATO until the fund lodges its annual return.
Transfer balance account (TBA)
A personal account maintained by the ATO that records all transactions affecting an individual's transfer balance cap. Credits are recorded when a retirement phase pension commences (at the value of the pension at commencement). Debits are recorded when a pension is commuted (fully or partially). A member's TBA balance must not exceed their personal transfer balance cap. The ATO uses TBA data from SMSF event-based reporting and annual returns to monitor compliance with the cap.
Transfer balance account report (TBAR)
The reporting form used by SMSFs to notify the ATO of events that affect a member's transfer balance account. Reportable events include: commencing a retirement phase pension, partially or fully commuting a pension, and certain structured settlement contributions. From 1 July 2023, all SMSFs must submit TBAR within 28 days after the end of the quarter in which a reportable event occurred. Accurate and timely TBAR lodgment is essential to prevent excess transfer balance tax assessments.
Transfer balance cap (TBC) Key rule
The limit on the total amount of superannuation savings that can be transferred into the tax-free retirement (pension) phase. The general transfer balance cap is $2.0 million for FY2025-26, rising to $2.1 million from 1 July 2026. An individual's personal transfer balance cap may be between $1.6 million and $2.0 million (rising to up to $2.1 million from 1 July 2026), depending on when they first commenced a retirement phase pension and how much indexation applied to them. Exceeding the cap triggers excess transfer balance tax on the notional earnings attributable to the excess. The cap is indexed in $100,000 increments in line with CPI.
Transition to retirement (TTR) pension
A special type of income stream available to individuals who have reached their preservation age but have not yet permanently retired. A TTR pension allows access to superannuation while continuing to work. Annual drawdown is limited to between 4% and 10% of the account balance per year. Importantly, fund earnings attributable to a TTR pension are not tax-free - they are taxed at up to 15%, the same as the accumulation phase. Tax-free earnings only apply once the member meets a full condition of release (such as retirement at or after preservation age).
Trust deed Key rule
The legal document that establishes an SMSF as a trust and governs how the fund operates. The trust deed sets out the rules for membership, contributions, investments, benefit payments, and how the deed itself can be amended. Trustees must act in accordance with both the trust deed and superannuation legislation at all times. Where there is a conflict between the two, superannuation law prevails. The trust deed should be reviewed and updated when laws change, when membership changes, or when the fund's circumstances change significantly. An outdated trust deed can cause compliance problems.
Trustee declaration
A written declaration that must be signed by each new SMSF trustee (or director of a corporate trustee) within 21 days of becoming a trustee. The declaration confirms that the individual has read and understood their duties and responsibilities as a trustee. The ATO publishes a standard trustee declaration form. Trustees are required to retain signed copies indefinitely - failure to do so may result in administrative penalties. The declaration does not need to be lodged with the ATO but must be kept as a fund record.
Trustee minutes
Written records of decisions made by the trustees of an SMSF. Trustees are required to document all significant trustee decisions, including investment decisions, changes to the investment strategy, commencement or commutation of pensions, approval of the auditor's report, and any other material matters affecting the fund. Minutes must be kept as part of the fund's required records for at least 10 years. They may be reviewed by the ATO or the fund's auditor and serve as evidence that trustees are meeting their obligations.
Terminal illness (condition of release)
A condition of release that allows a member to access preserved super as a tax-free lump sum if they have a terminal medical condition. Generally, 2 registered medical practitioners must certify that the member has an illness or injury likely to result in death within 24 months, and at least one practitioner must be a specialist in the relevant area. The tax-free treatment depends on payment within the certification period.
Total and permanent disability (TPD)
A condition of release that can allow a member to access preserved super if they become permanently incapacitated. Broadly, 2 registered medical practitioners must certify that the member is unlikely to ever again engage in gainful employment for which they are reasonably qualified by education, training, or experience. TPD benefits may be paid as a lump sum or income stream, with tax treatment depending on age and benefit components.
Trustee disqualification
An enforcement action that prevents an individual from acting as an SMSF trustee or as a director of a corporate trustee. Disqualification may be imposed by the ATO or a court for serious issues such as dishonesty, repeated or deliberate breaches, or failure to comply with ATO directions. A disqualified person must be removed from all SMSF trustee roles, and the fund may need to restructure or wind up if it cannot maintain a valid trustee structure.
U
Unlisted assets
Assets held by an SMSF that are not traded on a recognised stock exchange. Examples include: direct residential or commercial property, unlisted shares in private companies, investments in unlisted trusts, and private loans. Unlisted assets can be illiquid and may be difficult to value objectively. The ATO expects trustees to apply appropriate, market-based valuation methods for unlisted assets each year - particularly when the fund is in pension phase, preparing financial statements, or processing contributions and benefit payments.
Unlisted managed fund
A managed investment scheme that is not listed or traded on a stock exchange, where investors hold units in a pooled portfolio managed by a professional fund manager. Unlisted managed funds cover a wide range of asset classes including infrastructure, private equity, unlisted property, and diversified income funds. The key practical difference from listed funds is valuation: unlisted funds do not have a live market price, so trustees must use the unit price published by the fund manager (typically provided annually or quarterly) as the basis for the fund's financial statements. Trustees should retain annual tax statements and distribution statements, which contain the income, capital gains, foreign income, and franking credit components needed for the annual return. Where an unlisted fund involves a related party, the in-house asset and related party acquisition rules apply. See also: widely held managed fund; non-widely held unit trust.
V
Voluntary contributions
Superannuation contributions made by choice rather than because an employer is required to pay superannuation guarantee. They can include salary sacrifice contributions, personal deductible contributions, and personal non-concessional contributions. The term is useful in contribution strategies because voluntary contributions interact with caps, release schemes such as FHSSS, and age-based rules such as the work test.
W
Winding up (SMSF)
The process of closing an SMSF permanently. Trustees generally need to pay or provide for fund expenses, roll over or pay out all member benefits, complete final accounts and audit, lodge the final SMSF annual return, close fund accounts, and notify the ATO that the fund has been wound up. Common reasons include cost, trustee incapacity or death, family breakdown, or a decision to move benefits to an APRA-regulated fund.
Wallet register
A record maintained by an SMSF trustee documenting all cryptocurrency wallet addresses used to hold the fund's digital assets, together with the assets held at each address at any point in time. The ATO specifically expects SMSF trustees holding crypto to maintain a wallet register as part of their required records. The register should include: all wallet addresses associated with the fund; the type and quantity of assets held at each address; the platform or custody arrangement (exchange, hardware wallet, or software wallet); and the acquisition date and cost base for assets held at each address. The wallet register is reviewed by the fund's auditor and is used to verify that crypto assets are held in the fund's name, are not commingled with members' personal holdings, and are correctly valued. See also: self-custody; exchange custody.
Widely held managed fund
A managed investment scheme that makes units available to the general investing public and is managed by an independent fund manager with no connection to the SMSF or its members. Retail and wholesale index funds, sector funds, and most exchange-traded managed funds operated by major asset managers fall into this category. For SMSF compliance purposes, investments in widely held managed funds are generally straightforward: they are not in-house assets, related party acquisition restrictions do not apply, and market valuation is typically based on unit pricing supplied by the fund manager at year end. Trustees should retain annual tax statements (including any AMIT statements for attribution managed investment trusts) to support the fund's annual return. See also: non-widely held unit trust; AMIT.
Work test
A work requirement relevant to some personal deductible contributions for individuals aged 67 to 74. Since 1 July 2022, the work test is generally no longer required simply to make voluntary contributions, but it still applies when claiming a tax deduction for personal super contributions in that age range unless an exemption applies. The test requires at least 40 hours of gainful employment in a consecutive 30-day period during the financial year.
Written storage decision
A documented trustee decision recording where and how a collectable or personal use asset held by the SMSF will be stored. The SIS Regulations require trustees to make a documented storage decision when a collectable is acquired and to review and record it each time the storage arrangement changes. The decision must be in writing and kept as a fund record. The storage arrangement must comply with the collectable rules: the asset cannot be stored in a private residence used by a related party of the fund. The written storage decision is one of the records the auditor will check, and its absence is a straightforward compliance failure. See also: collectables and personal use assets.
0–9
15% tax rate (accumulation phase)
The standard tax rate on a complying superannuation fund's investment income - such as interest, dividends, and rent - while it is in the accumulation phase. This is significantly lower than most people's personal marginal tax rates, making superannuation one of Australia's most tax-effective long-term savings structures. Capital gains on assets held for more than 12 months are taxed at an effective 10% after the one-third CGT discount applies.
45-day holding period rule
An integrity rule that can deny an SMSF's entitlement to a franking credit tax offset where the fund has not held the relevant shares at risk for at least 45 days (excluding the acquisition and disposal days) around the dividend record date. Preference shares generally require a 90-day holding period. The rule prevents funds from buying shares shortly before a dividend to capture the franking credit and then selling immediately. Related integrity rules (the related payment rule and the dividend washing rule) apply where the fund has reduced its economic exposure or entered into arrangements to generate artificial franking benefits. Trustees who trade around dividend dates should confirm their entitlement with a registered tax agent before lodging the annual return. See also: franking credits; franking credit refund.
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Official SMSF Resources
Authoritative sources directly from the regulators and government bodies responsible for superannuation in Australia.