Making donations from your Self-Managed Superannuation Fund
As you might expect, the current bushfire crisis has many Australians reaching for their wallets or purses to help emergency service organisations and those in need. For people with self-managed superannuation funds (SMSFs), there may be the temptation to use money from their funds to make a charitable donation.
However, caution must be exercised. Under superannuation law, funds must be established and maintained for the sole purpose of providing funds in the event of the members’ death or retirement. Any attempt by a SMSF to make a charitable donation would be a breach of that sole purpose test.
A member of a SMSF who has retired, or who otherwise has access to unrestricted non-preserved benefits, may of course withdraw money as they see fit, so making a donation in those circumstances would not be an issue. Such a withdrawal would be treated either as a lump sum or as a pension payment to the member concerned.
Similarly, a member who has access to superannuation moneys as a result of being in receipt of a Transition to Retirement (TRIS) pension may also access funds in order to make a donation, provided the maximum 10% withdrawal limit is not exceeded.
In certain circumstances, a member may also be able to access their super on compassionate grounds if they are personally affected by the bushfires.
The Taxation Office administers release of benefits on compassionate grounds, which include:
- paying for medical treatment for the member or a dependant;
- making a payment on a loan to prevent the member from losing their house;
- modifying a home or vehicle for the special needs of the member or a dependant because of a severe disability; and
- paying for expenses associated with a death, funeral or burial of a dependant.
McConachie Stedman Financial Planning is an Authorised Representative of Wealth Management Matters Pty Ltd | ABN 34 612 767 807 | AFSL 491619