The SuperConcepts SMSF Glossary
163 SMSF terms, clearly defined for trustees, accountants, and advisers.
Account-based pension
An account-based pension is a retirement income stream paid from an SMSF, drawn down from a dedicated balance rather than a fixed contract amount. Earnings on the assets behind it are generally tax-free once the member is in retirement phase, and the trustee must pay a minimum percentage of the balance each year based on the member’s age. There’s no maximum on how much more they can draw, unless the pension is a transition to retirement pension, which caps withdrawals at 10%.
Accountants’ exemption
The accountants’ exemption was a carve-out that once let accountants give limited advice about setting up or winding up an SMSF without holding an Australian Financial Services Licence. It was removed on 1 July 2016, so accountants now need an AFSL or need to work under one, before recommending an SMSF to a client.
Accumulation phase
Accumulation phase is the period in which a member is still building their super rather than drawing an income stream from it. Contributions and investment earnings land here, taxed at up to 15%, until the member meets a condition of release and moves into pension phase.
Actuarial certificate
An actuarial certificate is a document from a qualified actuary confirming what proportion of an SMSF’s income is exempt from tax under the proportionate method. It’s only required when a fund holds both accumulation and pension money without segregating the underlying assets between the two.
Administrative penalty (SMSF)
An administrative penalty is a fine the ATO can issue directly to an SMSF trustee, or to the director of a corporate trustee, for specific rule breaches, without needing a court order first. The trustee pays it personally, not from the fund, with penalties measured in penalty units rather than a flat dollar figure, and it sits separately from any tax the breach might also trigger.
AFCA (Australian Financial Complaints Authority)
AFCA is the external dispute resolution body for complaints against financial firms, including advisers, platforms, and super funds. It generally can’t hear a complaint about an SMSF trustee’s own decisions, since trustees are members acting for themselves, but it can hear a complaint against an adviser, administrator, or other provider a fund has dealt with.
AFSL (Australian Financial Services Licence)
An AFSL is the licence a business needs to legally provide financial product advice, and giving advice about setting up or running an SMSF falls squarely within that. An accountant or adviser without one, or without operating as an authorised representative under someone else’s, can’t recommend an SMSF to a client.
Airdrop
An airdrop is a distribution of new cryptocurrency tokens to existing token holders, often tied to a protocol launch or promotion. Where it’s received in connection with a service, even just holding the original token under an eligible scheme, the ATO treats it as income at market value on receipt; otherwise the new tokens typically start with a zero cost base instead. Either way a new CGT asset is created, so the fund needs to record the token type, quantity, and market value at the date it landed.
AMIT (Attribution Managed Investment Trust)
An AMIT is a managed investment trust that attributes its income, including capital gains and franking credits, directly to unit holders each year rather than handing out a lump distribution to be worked out after the fact. For an SMSF, this mostly means a cleaner tax statement at year end, the fund manager’s AMIT Member Annual Statement (AMMA), and a cost base on the units that shifts slightly depending on what was distributed versus what was attributed.
AML/CTF Tranche 2
AML/CTF Tranche 2 is the extension of Australia’s anti-money laundering laws to accountants, lawyers, and other professional services firms, effective from 1 July 2026. For SMSF trustees, it means the accountant handling your fund may now need to verify your identity and ask more questions about the source of large contributions or unusual transactions before they can act for you.
Annual return (SMSF)
The SMSF annual return is the combined tax and compliance document lodged with the ATO each year, covering contributions, income, deductions, and member balances. It’s due by 31 October, though funds lodging through a registered tax agent usually get more time. Lodging late risks penalties and can knock the fund’s status on Super Fund Lookup, which flows on to its ability to receive contributions and rollovers.
APRA (Australian Prudential Regulation Authority)
APRA regulates banks, insurers, and most superannuation funds, but not SMSFs. That job belongs to the ATO, which is worth knowing because APRA-regulated funds run under a different rulebook and different member protections.
Approved SMSF auditor
An approved SMSF auditor is an ASIC-registered auditor who checks a fund’s financial statements and compliance each year before the annual return is lodged. They must be independent of the fund, so a trustee can never audit their own SMSF.
Arm’s length rule
The arm’s length rule says every SMSF transaction has to happen on the same terms unrelated parties would use, at fair market value. It matters most for rent, loans, and sales involving members or their family, since breaching it can turn the income involved into non-arm’s length income taxed at the top rate.
ASIC (Australian Securities and Investments Commission)
ASIC regulates the professionals around an SMSF rather than the fund itself: it registers SMSF auditors and oversees the advisers, accountants, and administrators trustees rely on. It doesn’t directly supervise individual SMSFs, that’s the ATO’s role.
ATO (Australian Taxation Office)
The ATO is the regulator for SMSFs in Australia, responsible for processing annual returns, tracking members’ transfer balance accounts, and taking action against funds that breach the rules. Its guidance at ato.gov.au is the first port of call for most trustee questions.
ATO Digital Service Provider (DSP)
An ATO Digital Service Provider is a software platform approved by the ATO to transmit data like SuperStream messages, TBARs, and annual returns on a fund’s behalf. Choosing an administrator or software built on an approved DSP is part of what keeps a fund’s reporting compliant and on time.
Auditor contravention report (ACR)
An auditor contravention report is lodged with the ATO when an SMSF auditor finds a reportable breach during the annual audit, generally within 28 days of finishing it. Not every issue makes the cut, but things like lending to members, in-house asset breaches, sole purpose test concerns, or repeated compliance failures usually do.
Bare trust
A bare trust holds legal title to an asset on an SMSF’s behalf while the fund is repaying a limited recourse borrowing arrangement, with the fund itself holding the beneficial interest the whole time. Once the loan’s paid off, legal title moves across to the SMSF. The 2026 changes to residential property LRBAs mean it’s worth checking whether a new or refinanced borrowing arrangement is still permitted before leaning on this structure.
BDBN (Binding death benefit nomination)
A binding death benefit nomination is a legally enforceable instruction telling the trustee exactly how to pay a member’s death benefit, and unlike an informal nomination, the trustee has no discretion to deviate from a valid one. It can only name dependants or the member’s legal personal representative, never anyone outside those categories. Some nominations lapse after three years unless renewed, others don’t, depending on what the trust deed allows.
Bring-forward rule
The bring-forward rule lets an eligible member bring three years’ worth of non-concessional contributions into a single year rather than sticking to the annual cap, up to $390,000 in FY2026-27. How much is actually available tapers with total super balance on the previous 30 June: the full three years applies under $1.84 million, two years between $1.84 million and $1.97 million, just the ordinary one-year cap between $1.97 million and $2.1 million, and nothing at all from $2.1 million up. The member also has to be under 75 at the time of the contribution.
Bullion
Bullion is gold, silver, or other precious metal held in physical form, usually as bars or investment-grade coins. It escapes the strict collectable rules that apply to numismatic coins and artwork, though it still has to sit in the fund’s name, get valued at market price each year, and ideally be insured with its storage properly documented.
Business real property (BRP)
Business real property is real estate used wholly for running a business, and it’s one of the few asset types an SMSF can buy from a related party and lease straight back to them, provided the deal is done on commercial terms. Residential property never qualifies, even if a business happens to operate out of it.
Capital gains tax (CGT)
The CGT discount cuts the taxable portion of a gain on an asset an SMSF has held for more than 12 months. In accumulation phase that brings the effective tax rate down to 10%, and in pension phase, gains on assets supporting a pension are exempt altogether, provided the fund’s transfer balance account requirements are being met.
Carry-forward contributions
Carry-forward, or catch-up, contributions let a member use unused concessional cap space from the past five years, available since 1 July 2019, to contribute more than the standard annual cap allows. It’s only available to members with a total super balance under $500,000 on the previous 30 June, and unused amounts expire after five years if not used.
Central management and control
Central management and control is one of the tests an SMSF must pass to count as an Australian fund, requiring that big-picture decisions, like the investment strategy, get made in Australia. A short stint overseas is generally fine, up to two years, but permanent offshore control can tip a fund into non-complying territory.
CHESS (Clearing House Electronic Subregister System)
CHESS is the ASX’s system for settling and registering ownership of listed shares. An SMSF has to hold its shares under the fund’s own Holder Identification Number rather than a member’s personal one, or the fund’s ownership of those shares becomes hard to evidence at audit.
Collectables and personal use assets
Collectables and personal use assets cover things like artwork, jewellery, antiques, coins, stamps, wine, cars, and boats, and they come with strict rules: no use by a related party, no storage in a related party’s home, insurance in the fund’s name within seven days of purchase, and a written record of where and how the asset is stored.
Commutation
Commutation is converting a pension back into a lump sum, either in full, which ends the pension and debits the member’s transfer balance account entirely, or in part, which just shrinks it. Trustees use it to manage an excess transfer balance, restructure a pension, or send money back to accumulation phase.
Complying fund
A complying fund is one that has retained its status under superannuation law and, as a result, keeps access to concessional tax treatment: roughly 15% on accumulation earnings and no tax on eligible pension-phase income. Serious or repeated breaches can lead the ATO to issue a notice of non-compliance, stripping that status away with severe consequences for the fund’s tax bill.
Concessional contributions
Concessional contributions are made with pre-tax money, such as employer contributions, salary sacrifice, and the superannuation guarantee, or with money a member later claims a deduction for, and they’re taxed at 15% inside the fund rather than at the member’s marginal rate. The annual cap is $32,500 in FY2026-27, and anything over it gets taxed at the individual’s own rate instead.
Concessional tax treatment
Concessional tax treatment is the general favourable tax rate a complying super fund receives: up to 15% on income and 10% on long-held capital gains in accumulation phase, and no tax at all on eligible earnings in pension phase. A fund that loses its complying status can lose all of this and face tax at 45% instead.
Condition of release
A condition of release is a specific event that has to happen before a member can legally access their preserved super. The common ones are reaching 65, retiring after preservation age, starting a transition to retirement pension, total and permanent disablement, terminal illness, and death. Until one of these is met, preserved benefits have to stay locked inside the system, no matter how much a member might want early access.
Contravention
A contravention is any breach of the super or tax laws governing SMSFs, from a late signature on a document through to lending fund money to a member. Serious contraventions get reported to the ATO by the fund’s auditor, and the ATO responds with anything from an education direction through to trustee disqualification.
Contribution caps
Contribution caps set the yearly limit on how much can go into super before extra tax applies, split between the concessional cap for pre-tax money and the non-concessional cap for after-tax money. For FY2026-27 those sit at $32,500 and $130,000, and going over either one triggers excess contributions tax.
Contribution reserving
Contribution reserving lets a fund accept a contribution in one financial year but allocate it to a member’s account in the next, so it counts toward the cap in the year it’s allocated rather than the year it’s received. Not every trust deed allows it, so it’s worth checking the deed before relying on the strategy near year end.
Contribution splitting
Contribution splitting lets a member roll part of their concessional contributions across to their spouse’s super account, treated as a rollover rather than a fresh contribution for the receiving spouse. It’s capped at 85% of the taxed contributions being split, and it doesn’t reduce what already counted against the original member’s cap.
Corporate trustee
A corporate trustee is a company acting as trustee of the SMSF instead of the members doing it personally, with every member sitting as a director. It makes membership changes far less painful, since assets stay titled to the company rather than needing to be retitled every time someone joins or leaves. The company itself has to be registered with ASIC, and every director has to be eligible to act.
Crypto assets (SMSF)
Crypto assets are cryptocurrencies and digital tokens an SMSF holds as an investment, treated by the ATO as property for capital gains purposes. Trustees need to show the investment fits the fund’s written strategy, hold it in the fund’s name rather than a member’s personal wallet or account, and keep detailed records of every transaction.
Crypto-to-crypto swap
A crypto-to-crypto swap is trading one cryptocurrency for another without converting to Australian dollars at any point, and the ATO still treats it as a disposal and a fresh acquisition, both valued in AUD on the day. That means a taxable event can happen even though no actual dollars changed hands, so the value of both sides needs recording every time.
Death benefit
A death benefit is the super paid out from a fund when a member dies, either as a lump sum or as an income stream to an eligible beneficiary. What tax applies depends on the beneficiary’s relationship to the member, the components making up the benefit, and both people’s ages. Trustees are expected to pay it out promptly, and in line with any valid binding death benefit nomination.
Defined benefit pension
A defined benefit pension pays a set income based on a formula, rather than drawing down an account balance, and it’s a legacy structure rarely set up in SMSFs today. Some older funds still carry one, and they come with their own commutation and reporting rules that don’t line up neatly with a standard account-based pension.
Dependant (superannuation definition)
Under super law, a dependant is someone the trustee can pay a death benefit to directly, and it covers a spouse, children of any age, anyone in an interdependency relationship with the member, and anyone who was financially dependent on them. Non-dependants can only receive the benefit as a lump sum, never as an income stream.
Disqualified person
A disqualified person is someone legally barred from acting as an SMSF trustee, usually because of a dishonesty conviction, undischarged bankruptcy, or a disqualification handed down by the ATO or a court. Running a fund while disqualified is a criminal offence, not just a compliance issue.
Dividend Reinvestment Plan (DRP)
A Dividend Reinvestment Plan lets a fund take new shares instead of a cash dividend from a listed company, and each reinvestment counts as a fresh share purchase with its own acquisition date and cost base. Funds holding shares in companies with active DRPs end up with a lot of small parcels to track, which adds up over the years.
Division 293 tax
Division 293 tax adds an extra 15% on concessional contributions for individuals whose income plus relevant contributions pushes past $250,000 in a year. It’s charged on whichever is lower, the contributions themselves or the amount over the threshold, and the ATO assesses the member personally rather than the fund, who can pay it directly or release the amount from super using a release authority.
Division 296 tax
Division 296 tax applies from FY2026-27 to calculated earnings on the portion of a member’s total super balance above $3 million, with a further threshold at $10 million, both indexed to CPI in set increments over time. It’s assessed to the individual rather than the fund, and it shouldn’t be confused with ordinary capital gains tax or fund income tax.
Downsizer contribution
A downsizer contribution lets someone 55 or over put up to $300,000 from selling their home into super, or $600,000 as a couple, without it counting against the non-concessional cap. The home needs to have been owned for at least ten years, and a person can only make one downsizer contribution per eligible property sold.
Education direction
An education direction is a written order from the ATO requiring a trustee, or a corporate trustee’s director, to complete an approved course after a suspected breach. It’s meant to fix a knowledge gap rather than punish, though ignoring it can trigger further action.
Electronic service address (ESA)
An electronic service address is the identifier an SMSF uses to receive employer contributions and rollovers through SuperStream, issued by a SuperStream messaging provider such as the fund’s own administration platform. Without a valid one, registered with the ATO, a fund can’t receive SG contributions electronically or accept an incoming rollover from another fund.
Employee Share Scheme (ESS)
An Employee Share Scheme gives an employee shares or rights to shares in their employer as part of their pay, and those interests come with their own tax treatment before an SMSF ever gets involved, taxed either upfront or at a later deferred taxing point depending on the scheme. Anyone looking to transfer ESS shares into their fund should sort out the personal tax position first, since the timing rules can interact with the fund’s cost base in ways that aren’t obvious.
Enduring power of attorney (EPA)
An enduring power of attorney lets someone else make financial decisions for a member if they lose capacity, and in an SMSF it doubles as a succession planning tool: the attorney can step in as trustee, or director of the corporate trustee, in the member’s place. Requirements differ by state, so it’s worth getting proper legal advice on the document itself.
Enforceable undertaking
An enforceable undertaking is a written commitment a trustee gives the ATO setting out how a breach will be fixed and prevented from happening again, usually offered by the trustee rather than imposed. Falling short of it can bring further ATO action.
ESIC (Early Stage Innovation Company)
An ESIC is a qualifying start-up that meets the ATO’s innovation tests, and investing in one can bring a 20% non-refundable tax offset plus a 10-year CGT exemption on shares held between one and ten years. An SMSF can invest, but should watch for in-house asset issues if the company is run by a related party.
ETF (exchange-traded fund)
An ETF is a managed fund that trades on an exchange like the ASX, giving exposure to a diversified basket of assets, Australian shares, global shares, or bonds, through a single purchase. They’re valued at market price like any other listed security and sit outside the in-house asset rules, which is part of why they’re such a common building block in SMSF portfolios.
Event-based reporting
Event-based reporting is the requirement to tell the ATO about events affecting a member’s transfer balance account, like starting or partly commuting a pension. Since 1 July 2023, every SMSF has had to report these within 28 days of the end of the relevant quarter.
Exchange custody
Exchange custody is when a crypto exchange holds the private keys to a fund’s tokens rather than the fund controlling them directly. It only works for SMSF purposes if the account is in the fund’s name with clear records, since a member’s personal exchange account doesn’t establish the fund’s ownership, and there’s always the added risk of losing access if the exchange fails or is hacked.
Excess concessional contributions
Excess concessional contributions are anything over the member’s annual cap, including any carry-forward amount used. The excess gets added to assessable income and taxed at the member’s marginal rate, with a 15% offset for tax the fund’s already paid, and the member can generally release up to 85% of it from super. Anything left unreleased doesn’t just stay taxed twice, it can also count toward the non-concessional cap.
Excess non-concessional contributions
Excess non-concessional contributions are anything over the annual or bring-forward cap, and the ATO issues a determination showing the excess plus an associated earnings amount. A member can release the excess and 85% of the earnings, with the earnings taxed at marginal rates, or leave it in and face tax at the top rate instead.
Excess transfer balance
An excess transfer balance is the amount by which a member’s transfer balance account has gone over their personal cap, plus whatever notional earnings build up on it before it’s fixed. It usually needs commuting out of retirement phase, and the notional earnings get taxed at 15% for a first breach, 30% after that.
Exempt current pension income (ECPI)
Exempt current pension income is the slice of a fund’s earnings that escapes tax because it’s tied to assets supporting a retirement-phase pension. Under the segregated method it’s fully exempt with no actuarial certificate needed, and under the proportionate method an actuary works out the exempt share each year instead.
Family law superannuation splitting
Family law superannuation splitting lets a court order or agreement divide a member’s super interest between separating spouses, treating it as a splittable payment rather than a withdrawal. Valuing an SMSF interest for a split usually needs its own process, and since December 2024 the low rate cap no longer applies to amounts split this way.
First Home Super Saver Scheme (FHSSS)
The First Home Super Saver Scheme lets eligible first home buyers pull out voluntary contributions, plus deemed earnings, to help fund a deposit. The releasable amount tops out at $50,000 per person for determinations requested since 1 July 2022, and the release itself is arranged through the ATO rather than the fund directly.
Foreign currency asset
A foreign currency asset is anything denominated in a currency other than Australian dollars, like international shares or an offshore bank account. Gains and losses purely from currency movement get recognised separately from the underlying investment’s performance, which means a fund can make a taxable forex gain even if the asset itself hasn’t moved in price.
Foreign income tax offset (FITO)
A foreign income tax offset lets an SMSF claim back withholding tax paid to another country on income like dividends or interest. It reduces the fund’s Australian tax bill dollar for dollar, up to the amount of Australian tax that would’ve applied to the same income anyway.
Franking credits
Franking credits are tax credits attached to dividends paid by Australian companies, and an SMSF includes both the cash dividend and the credit in its income before using the credit to offset tax owed. Where the credits are worth more than the tax bill, the fund can get the difference refunded.
Franking credit refund
A franking credit refund is the cash the ATO pays back when a fund’s franking credits exceed its actual tax bill for the year. It happens often in accumulation phase too, since the fund pays tax at 15% while credits typically arrive at the 30% corporate rate, and it’s especially valuable in pension phase, where earnings are already tax-free and the credits come back in full.
Government co-contribution
The government co-contribution rewards personal after-tax contributions from low and middle income earners, adding 50 cents for every dollar contributed up to a maximum of $500. Both the eligibility and the amount taper off as income rises, with the thresholds indexed each year.
GST and SMSFs
GST becomes relevant to an SMSF when its enterprise income, most commonly rent from a commercial property, passes the standard $75,000 registration threshold. Once registered, the fund charges GST on relevant income but can also claim input tax credits on eligible expenses, so it isn’t purely a downside.
Hard fork
A hard fork is a permanent split in a blockchain that creates two separate chains from a shared history, and holders of the original token usually receive an equal amount of the new one. The ATO treats the new tokens as a fresh asset acquired at the time of the fork, generally with a zero cost base.
Holder Identification Number (HIN)
A Holder Identification Number is the identifier used to register ownership of ASX-listed shares through CHESS. An SMSF needs its own HIN, separate from any member’s personal one, or its share trades can’t be clearly evidenced as belonging to the fund. A fund gets its HIN through its own brokerage account when that account is opened.
In-house asset reduction plan
An in-house asset reduction plan is the written plan a trustee must prepare when in-house assets exceed 5% of the fund at year end, setting out how they’ll get back under the limit within the following year. It’s a statutory requirement, not a suggestion, and an auditor will check whether one exists and is actually being followed.
In-house assets
In-house assets are investments in, loans to, or leases to a related party of the fund, and they can’t exceed 5% of the fund’s total assets at any point in the year. Business real property leased back to a related party on commercial terms is one of the main exceptions to the rule.
In-specie transfer
An in-specie transfer moves an asset into or out of an SMSF without a cash sale, most commonly personally held shares going into the fund. It has to happen at market value on the transfer date, and it can trigger both a CGT event for the transferring member and, depending on how it’s paid for, a contribution that counts against the fund’s caps.
Individual trustee
An individual trustee structure has the fund’s members acting as trustees personally rather than through a company, with every member a trustee and every trustee a member. It works fine for smaller funds, but every change in membership means retitling all the fund’s assets, which a corporate trustee avoids. A single-member fund using this structure still needs a second individual trustee who isn’t a member, typically a family member or close associate.
Insurance inside an SMSF
Insurance inside an SMSF covers life, TPD, or income protection cover held by the fund for one or more members. It isn’t automatic the way it can be in a retail or industry fund, so trustees need to actively consider it as part of the investment strategy rather than assume it’s there. The fund pays the premiums, and depending on the type of cover, they may be deductible to the fund.
Interdependency relationship
An interdependency relationship exists between two people, not necessarily a couple, who live together, where one or both provides the other with financial support, and one or both provides domestic support and personal care. Someone in this kind of relationship with a deceased member counts as a dependant for super purposes, which means they can receive a death benefit directly from the fund.
Investment strategy
An investment strategy is the written document setting out how an SMSF’s assets will be invested to meet the fund’s goals and its members’ retirement needs. The ATO expects it reviewed at least annually, covering risk, diversification, liquidity, the fund’s ability to pay benefits and expenses as they fall due, and the insurance needs of members, and a generic template rarely holds up to scrutiny.
No key terms start with this letter
No key terms start with this letter
Lapsing BDBN
A lapsing BDBN is a binding death benefit nomination that expires after a set period, usually three years, unless it’s renewed. Once it lapses, the trustee generally regains discretion over how the death benefit gets paid, unless another valid nomination is already in place.
Legacy pension conversion
Legacy pension conversion refers to the window opened by regulations that took effect on 7 December 2024, letting members fully commute old lifetime, life expectancy, or market-linked pensions that started before 20 September 2007. The window runs for five years, until 7 December 2029, and the commutation has to be complete, not partial, to qualify.
Legal personal representative (LPR)
A legal personal representative is the executor named in a member’s will, or the administrator of the estate if there isn’t one. A death benefit can be paid to the LPR, but that doesn’t guarantee who ultimately receives it, since the will and the rules of intestacy govern that from there.
Limited recourse borrowing arrangement (LRBA)
A limited recourse borrowing arrangement lets an SMSF borrow to buy a single asset, held in a bare trust while the loan’s outstanding, with the lender’s recourse limited to that one asset if things go wrong. From 10 August 2026, new LRBAs for real property generally have to involve business real property unless a transition carve-out applies, so it’s worth checking the current rules before signing anything.
Listed investment company (LIC)
A listed investment company is a closed-ended fund listed on the ASX, trading at a price that can sit above or below its net tangible assets, the actual value of what it holds. For SMSF purposes it behaves like any other listed security: valued at market price and outside the in-house asset rules, unless the LIC itself is a related party.
Listed securities
Listed securities are shares, units, or other instruments traded on a market like the ASX, and SMSFs hold them constantly given how straightforward they are to value and report. They generally sit outside the in-house asset restrictions too, unless the entity behind them counts as a related party.
Loans to members
Loans to members, or financial assistance to members more broadly, are flatly prohibited under the SIS Act regardless of how fair the terms look on paper. It’s one of the most common contraventions auditors report, since even a short-term, interest-free loan to a member or their relative counts as a breach.
Low rate cap amount
The low rate cap amount is the lifetime limit on how much of a lump sum super withdrawal can be taxed at a reduced rate, applying only to members who’ve reached preservation age but are still under 60. It sits at $260,000 for FY2026-27, and any amount used against it is gone for good.
Lump sum benefit
A lump sum benefit is a super payment made as a single amount rather than an income stream, available once a member has met a condition of release. Members 60 or over generally receive it tax-free from a taxed fund, though younger members and non-dependants receiving a death benefit can face tax on part of it.
Managed funds
Managed funds pool money from many investors into a portfolio run by a professional manager, with investors holding units rather than the underlying assets directly. They’re a common way for an SMSF to reach asset classes that would be hard to access on its own, like unlisted infrastructure or global bonds.
Market valuation
Market valuation is the process of pricing an SMSF’s assets using objective, supportable evidence, required whenever the fund prepares accounts, reports in its annual return, or tests something like the in-house asset limit. Listed shares are easy, valued at the quoted price, but property and unlisted holdings often need a proper independent valuation to stand up at audit.
Member
A member is anyone whose super benefits sit inside the SMSF, and every member has to be either a trustee or a director of the fund’s corporate trustee. Up to six members are allowed per fund, and each one’s interest is tracked separately from everyone else’s.
Minimum pension drawdown
Minimum pension drawdown is the smallest amount that has to come out of an account-based pension each year, set as a percentage of the balance on 1 July and rising with age, from 4% under 65 up to 14% at 95 and over. Missing it means the pension fails to meet the standards, and the fund loses the ECPI exemption for that year as a result.
Non-arm’s length expenditure (NALE)
Non-arm’s length expenditure happens when a related party provides something to the fund for free or below market rate, like a discounted service. It can push the fund’s income, sometimes well beyond just the discounted item itself, into the 45% top tax rate rather than the usual 15%.
Non-arm’s length income (NALI)
Non-arm’s length income is income an SMSF receives from a deal that wasn’t done at arm’s length, where the fund ends up better off than it would in a genuine market transaction. Rent from a related party priced above market value is a classic example, and so is an inflated dividend from a private company a member controls; either way it gets taxed at 45% instead of the usual 15%.
Non-binding nomination
A non-binding nomination sets out a member’s preferred beneficiary without legally forcing the trustee’s hand, unlike a BDBN. The trustee still has to consider it, but ultimately keeps discretion over how the death benefit is actually paid. In a fund where the members are also the trustees, planning who controls the trustee itself after death matters just as much as the nomination.
Non-complying fund
A non-complying fund has lost its complying status through serious or repeated breaches, or by failing something fundamental like the residency test. The tax consequences are severe, potentially taxing a broad base of the fund’s assets at the top rate, so professional advice is worth seeking immediately if the ATO raises concerns.
Non-concessional contributions (NCCs)
Non-concessional contributions are made from after-tax money and aren’t taxed again inside the fund. The annual cap is $130,000 in FY2026-27, and members with a total super balance at or above the transfer balance cap can’t make them at all.
Non-lapsing BDBN
A non-lapsing BDBN stays in force until the member changes or cancels it, rather than expiring on a fixed schedule. Not every trust deed allows one, and even a non-lapsing nomination is worth reviewing after major life events like marriage, divorce, a new child, or the death of a nominated beneficiary.
Non-widely held unit trust
A non-widely held unit trust is controlled by a small group of investors rather than the public, often a family trust, and an SMSF’s investment in one is likely to count as an in-house asset if a member or their associates control it. Strict conditions in the regulations can sometimes exclude it from that treatment, but they require the trust to steer clear of borrowing, leasing most assets to related parties, and holding anything that would breach the SMSF rules if the fund held it directly, and they’re easy to breach without specialist advice.
Notice of intent to claim a deduction
A notice of intent to claim a deduction is the form a member has to lodge with their fund before claiming a personal contribution as a tax deduction. It has to be given, and acknowledged by the fund, before the earlier of lodging their tax return or the end of the following financial year.
Numismatic coin
A numismatic coin is valued for its rarity or history rather than its metal content, and that puts it squarely in the collectable category with all the strict storage and insurance rules attached. Investment-grade bullion coins, by contrast, are valued for their metal and generally escape those same rules. If it’s genuinely unclear which category a coin falls into, the safer approach is to apply the collectable rules anyway.
Off-market transfer
An off-market transfer moves ASX-listed shares between two parties through CHESS without going through the exchange’s normal trading system, and it’s the standard way to move shares in-specie into or out of an SMSF. The transfer has to be recorded at market value on the day, usually the closing price, and kept for audit purposes.
Ordinary time earnings (OTE)
Ordinary time earnings is the base used to work out how much superannuation guarantee an employer owes, generally covering base salary, commissions, and shift loadings but not overtime. Knowing what counts helps a member check whether their employer’s SG contributions have actually been calculated correctly.
Parcel identification
Parcel identification is working out which specific batch of a security is being sold when a fund holds the same shares bought at different times and prices. First-in-first-out is the usual default, though a specific parcel can be nominated instead if it’s documented at the time, and getting it wrong can change whether the CGT discount applies.
Part 8 associate
A Part 8 associate is a person or entity treated as connected to an SMSF member under the SIS Act, covering relatives, business partners, and companies or trusts a member controls. It matters because deals involving a Part 8 associate can trip the related party, in-house asset, and arm’s length rules.
Payday super
Payday super is the reform requiring employers to pay super guarantee contributions at the same time as wages, rather than quarterly, starting 1 July 2026. For SMSF members receiving employer contributions, it means smaller, more frequent deposits, so it’s worth checking the fund’s bank account and ESA can keep up with the new pace.
Pension phase
Pension phase is when a member has started drawing a retirement income stream from the fund, and earnings on the assets behind that pension are generally tax-free, subject to the transfer balance cap rules being met. A member can sit in pension phase for part of their balance while the rest stays in accumulation, all within the same fund.
Personal deductible contribution
A personal deductible contribution is an after-tax contribution a member later claims a tax deduction for, effectively converting it into a concessional one. The deduction only counts once the fund has acknowledged a valid notice of intent, and from that point the contribution is taxed at 15% and counted against the concessional cap.
Preservation
Preservation is the rule keeping most super benefits locked inside the system until a member meets a condition of release. It applies to the bulk of most people’s balance, contributions made since 30 June 1999 in particular. A smaller restricted non-preserved portion can come out in limited situations, such as leaving an employer, and any unrestricted non-preserved benefits can be accessed at any time.
Preservation age
Preservation age is the age at which a member becomes eligible to access their preserved super, provided they also meet a condition of release such as retiring. For anyone born on or after 1 July 1964, that age is 60. Earlier birth dates bring it down as far as 55.
Private credit
Private credit is a loan an SMSF makes directly to a borrower, outside a bank or public bond market, and it has to sit on genuinely commercial terms with proper documentation. Lending to a member or their relative is banned outright, and lending to any other related party is heavily restricted by the in-house asset and arm’s length rules even where it isn’t flatly prohibited, and the fund still needs to weigh how illiquid the loan might be against its own need to pay pensions and expenses.
Proportionate method
The proportionate method calculates exempt current pension income using an actuarial certificate, based on the ratio of pension assets to total fund assets. It’s the method required whenever a fund holds both accumulation and pension interests without segregating the underlying assets.
Qualified independent valuer
A qualified independent valuer has the relevant expertise, a certified practising valuer for real property, say, and no personal connection to the fund or its members, and their valuation is expected whenever a property is bought, an asset changes hands with a related party, or an auditor asks for one. A related party’s own estimate, however confident, doesn’t meet that standard.
Rectification direction
A rectification direction is a written ATO order requiring a trustee to fix a specific breach within a set timeframe and show evidence of having done so. It’s aimed at correcting the practical fallout of a contravention, and ignoring it is a strict liability offence in its own right, regardless of intent.
Related party
A related party is anyone with a close connection to the fund or its members, covering the members themselves, their relatives (spouses, parents, children, and siblings among them), and any company or trust they or their associates control. Deals with a related party attract the strictest scrutiny under the arm’s length and in-house asset rules.
Related party acquisition rule
The related party acquisition rule generally stops an SMSF from buying an asset off a member or their associate, with a handful of named exceptions like listed securities and business real property. Even where an exception applies, the purchase still has to happen at market value, or the fund risks the deal being treated as a contribution instead of a genuine sale.
Residency requirements (SMSF)
Residency requirements are the conditions an SMSF has to meet all year to count as an Australian fund and keep its tax concessions, covering whether it was established in Australia or holds an Australian asset, where it’s centrally controlled, and the active member test. Failing any of them can push a fund into non-complying territory, with a costly tax outcome to match.
Retirement (superannuation definition)
Retirement has a specific legal meaning for super purposes: a member past preservation age generally counts as retired once an employment arrangement has ended and they don’t intend to work ten or more hours a week again. Reaching 65 is a separate condition of release that doesn’t depend on any of this.
Reversionary pension
A reversionary pension automatically continues to a nominated dependant when the original pensioner dies, rather than being commuted and restarted from scratch. The beneficiary gets a twelve-month grace period before the pension’s full value counts against their own transfer balance cap.
Rollover
A rollover moves a super benefit from one fund to another, including into or out of an SMSF, without any of it being paid out to the member along the way. It’s processed through SuperStream, doesn’t count as a contribution, and doesn’t trigger tax, though rolling money out of a fund in pension phase can debit the member’s transfer balance account.
SAF (Small APRA Fund)
A Small APRA Fund shares almost everything with an SMSF on paper, including the six-member limit and the same investment flexibility. The real difference is trustee control: a licensed professional runs an SAF instead of the members, which suits people who want the structure without taking on personal trustee liability.
Safe harbour terms (LRBA)
Safe harbour terms are ATO benchmark conditions for related-party LRBAs. For real property, that means the RBA’s standard variable housing rate plus a margin, a maximum 70% loan-to-value ratio, and a term no longer than 15 years; for listed shares and units, it’s the same base rate plus a different margin, a maximum 50% LVR, and no more than 7 years. Meet the relevant benchmarks and the ATO accepts the loan as arm’s length without further argument; fall outside them and the trustee has to prove independently that the deal is still genuinely commercial.
Salary sacrifice
Salary sacrifice is an arrangement where an employee gives up part of their pre-tax pay in exchange for extra super contributions instead. Those contributions count as concessional, taxed at 15% rather than the employee’s marginal rate, which is why it tends to suit higher income earners best.
Segregated method
The segregated method sets aside specific fund assets to support pensions exclusively, with all income from those assets exempt from tax and no actuarial certificate required. It isn’t available once any member’s total super balance passes $1.6 million on the previous 30 June, a threshold that hasn’t moved even as other caps have.
Self-custody
Self-custody means the fund itself controls the private keys to its crypto, through a hardware or software wallet set up in the fund’s name rather than a member’s own wallet. Using a member’s personal wallet for fund assets is a common compliance slip, since it blurs the line between personal and fund ownership.
Self-managed superannuation fund (SMSF)
A self-managed superannuation fund is a private super fund regulated by the ATO, with up to six members who are also either its trustees or directors of its corporate trustee. It hands trustees direct control over the fund’s investments and strategy, along with full legal responsibility for keeping it compliant. There are more than 650,000 SMSFs in Australia holding over $1 trillion in assets between them, a genuinely large slice of the country’s retirement savings.
SIS Act (Superannuation Industry (Supervision) Act 1993)
The SIS Act is the main federal law governing Australian super funds, including SMSFs, setting out trustee duties, investment restrictions, and penalties. It sits alongside the SIS Regulations, tax law, the fund’s own trust deed, and general trust law, all of which apply at once.
Six-member rule
The six-member rule set the maximum number of members an SMSF can have at six, up from four, since 1 July 2021. Larger family groups can consolidate their super into one fund as a result, though a corporate trustee is worth considering once membership grows past four.
Small business CGT concessions
Small business CGT concessions let eligible business owners contribute proceeds from selling their business into super outside the ordinary contribution caps. The retirement exemption carries a $500,000 lifetime limit per person, while amounts under the 15-year exemption are capped against a separate, indexed lifetime CGT cap, and both come with strict eligibility tests that are easy to get wrong without advice.
SMSF administrator
An SMSF administrator handles the day-to-day accounting, compliance, and reporting for a fund on the trustees’ behalf, without taking on the trustee’s legal responsibilities themselves. Trustees still make the decisions and carry the liability, but the administrator does the heavy lifting on bookkeeping, financial statements, and getting the annual return ready to lodge.
SMSF establishment
SMSF establishment covers everything involved in setting a fund up: preparing the trust deed, appointing trustees, registering for an ABN and TFN with the ATO, electing to be a regulated fund, opening a dedicated bank account, and putting an investment strategy in place. The fund needs to be fully operational before it can accept any contribution or rollover.
Sole purpose test
The sole purpose test requires an SMSF to exist purely to provide retirement benefits to members, or benefits to their dependants if a member dies first. Every investment and decision the fund makes gets tested against both its stated purpose and its actual effect, not just the ones that look risky on paper.
Spouse contribution
A spouse contribution is a non-concessional contribution one partner makes into the other’s super account, and the contributing spouse can pick up a tax offset of up to $540 if the receiving spouse earns under $37,000. That offset phases out entirely by $40,000, and neither threshold has moved in a long time.
Staking rewards
Staking rewards are tokens earned for locking up crypto to help run a proof-of-stake blockchain, and the ATO treats them as ordinary income at their market value when received. That value then becomes the cost base for working out any gain or loss when the tokens are eventually sold.
Structured settlement contribution
A structured settlement contribution comes from an eligible personal injury payment or court order, and a member can elect to exclude it from their non-concessional cap. The election needs to reach the fund before or when the contribution is made, so the paperwork matters as much as the money.
Super Fund Lookup
Super Fund Lookup is the ATO’s public register confirming whether a fund, including an SMSF, is registered and holds complying status. Employers and other funds check it before sending contributions or rollovers, so an SMSF needs to appear on it as complying to receive either.
Superannuation guarantee (SG)
Superannuation guarantee is the minimum percentage of an employee’s ordinary time earnings an employer has to contribute to super on their behalf, sitting at 12% from 1 July 2025. For SMSF members who are employees, these contributions arrive via SuperStream and count toward the concessional cap.
SuperStream
SuperStream is the ATO’s mandatory system for sending super contributions and rollovers electronically in a standard format. An SMSF needs a compliant bank account and a valid electronic service address to receive anything through it, whether that’s an employer’s SG payment or an incoming rollover.
Tax dependant (death benefits)
A tax dependant is narrower than a dependant under super law, and the difference catches people out: it generally covers a spouse, a child under 18, or someone who was financially dependent on or in an interdependency relationship with the deceased, but not an adult child who wasn’t dependent. Paying a death benefit to someone who’s a super law dependant but not a tax dependant can mean tax applies where the family expected none.
Tax-free component
The tax-free component is the part of a super benefit that isn’t taxed when paid out, regardless of the recipient’s age, and it comes mostly from non-concessional contributions. Every benefit gets split into a tax-free and taxable component based on what’s built up each one inside the member’s account.
Taxable component
The taxable component is the part of a benefit that can be taxed depending on the recipient’s age, built up from concessional contributions, employer contributions, and earnings. Paid to someone 60 or over from a taxed fund it’s generally tax-free, but a recipient under 60 pays up to 20% plus the Medicare levy on the taxed element, softened by a 15% tax offset, and non-dependants receiving a death benefit can face tax regardless of age.
Terminal illness (condition of release)
Terminal illness lets a member access their super tax-free as a lump sum where two registered doctors, one a relevant specialist, certify they’re likely to die within 24 months. The tax-free treatment only holds if the benefit’s paid within that certification period.
Total and permanent disability (TPD)
Total and permanent disability is a condition of release triggered when two doctors certify a member is unlikely to ever work again in a role they’re reasonably qualified for. It can be paid as a lump sum or income stream, and the tax treatment shifts depending on the member’s age and what the benefit’s made up of.
Total superannuation balance (TSB)
Total superannuation balance is the value of everything a member holds across every super fund they belong to, measured each year on 30 June. It decides eligibility for several things at once, including the bring-forward rule, catch-up concessional contributions, and the government co-contribution. A member can check their TSB through myGov, though for an SMSF it won’t update until the fund actually lodges its annual return, which can leave the figure looking out of date.
Transfer balance account (TBA)
A transfer balance account is the ATO’s running record of everything affecting a member’s transfer balance cap, crediting the value of a pension when it starts and debiting it when the pension’s commuted. It draws on data from event-based reporting and the annual return to keep tabs on whether a member’s over their cap.
Transfer balance account report (TBAR)
A transfer balance account report is how an SMSF tells the ATO about events affecting a member’s transfer balance account, like starting or commuting a pension. It’s due within 28 days of the end of the quarter the event happened in, and getting it in late risks an incorrect excess transfer balance assessment.
Transfer balance cap (TBC)
The transfer balance cap limits how much super a member can move into the tax-free retirement phase, sitting at $2.1 million in FY2026-27. Some members carry a lower personal cap depending on when they first started a pension, and going over it triggers tax on the notional earnings attributable to the excess. The general cap is indexed in $100,000 steps in line with CPI, which is why it doesn’t move every single year.
Transition to retirement (TTR) pension
A transition to retirement pension lets someone who’s reached preservation age but hasn’t fully retired draw an income from super while still working, with drawdowns each year sitting between a 4% minimum and a 10% maximum of the balance. Earnings behind it are taxed the same as accumulation phase, up to 15%, right up until the member meets a full condition of release.
Trust deed
A trust deed is the legal document that establishes an SMSF and sets the rules for membership, contributions, investments, and benefit payments. Where it conflicts with superannuation law, the law wins, and an outdated deed that hasn’t kept pace with legislative change is a common source of compliance headaches.
Trustee covenants
Trustee covenants are the general duties every SMSF trustee owes under the SIS Act, things like acting honestly, exercising skill and care, and keeping the fund’s assets separate from personal ones. They sit underneath more specific rules like the sole purpose test, and a breach of the covenants can stand on its own as a contravention even without breaking any other single rule.
Trustee declaration
A trustee declaration is a document every new trustee, or corporate trustee director, has to sign within 21 days of taking on the role, confirming they understand their duties. It doesn’t get lodged with the ATO, but it does need to be kept indefinitely as a fund record.
Trustee disqualification
Trustee disqualification removes someone from acting as an SMSF trustee, usually imposed by the ATO or a court over dishonesty or repeated breaches. Once disqualified, the person has to be removed from every trustee role tied to the fund, and the fund may need restructuring to carry on without them.
Trustee minutes
Trustee minutes are the written record of every significant decision a fund’s trustees make, from investment changes to approving the auditor’s report. They need to be kept for at least ten years, and they’re often the only evidence a trustee has that a decision was properly made and considered.
Unlisted assets
Unlisted assets are anything an SMSF holds that isn’t traded on a public exchange, like direct property or shares in a private company. They can be harder to value objectively than listed holdings, and the ATO expects a properly supported, market-based valuation each year regardless.
Unlisted managed fund
An unlisted managed fund pools investor money into a portfolio without trading on an exchange, so there’s no live market price to rely on for valuation. Trustees instead use the unit price the fund manager publishes, usually quarterly or annually, and keep the tax statements needed for the annual return.
Untaxed plan cap amount
The untaxed plan cap amount limits how much of a lump sum’s untaxed component can get concessional tax treatment, sitting at $1,935,000 for FY2026-27. It mostly comes up for benefits sourced from an untaxed fund, which is uncommon for SMSFs but still worth knowing if a rollover brings one in.
Voluntary contributions
Voluntary contributions are anything put into super by choice rather than because an employer’s required to, covering salary sacrifice, personal deductible contributions, and personal non-concessional contributions. They’re the ones that interact most with contribution caps, release schemes such as the First Home Super Saver Scheme, and age-based rules, so they’re where most contribution strategy actually happens.
Wallet register
A wallet register is a fund’s record of every crypto wallet address it uses and what’s held at each one, expected by the ATO as part of a fund’s normal records when it holds digital assets. It’s what an auditor checks to confirm the fund’s crypto is genuinely the fund’s, not commingled with a member’s personal holdings.
Widely held managed fund
A widely held managed fund is available to the general public and run by a manager with no connection to the SMSF or its members, covering most retail and wholesale index funds. Investments in one are generally straightforward for compliance purposes, sitting outside the in-house asset and related party rules entirely.
Winding up (SMSF)
Winding up an SMSF is the process of closing it for good: paying out or rolling over every member’s benefit, finishing the final accounts and audit, lodging the last annual return, and telling the ATO it’s done. Common triggers include cost, a trustee’s death or incapacity, family breakdown, or a decision to move to an APRA-regulated fund instead.
Work test
The work test requires at least 40 hours of gainful employment across 30 consecutive days in a financial year, and it still applies to members aged 67 to 74 claiming a deduction for personal contributions. It’s no longer needed just to make voluntary contributions in that age range, only to claim the deduction on top of them.
Written storage decision
A written storage decision is the documented record a trustee has to keep of where and how a collectable or personal use asset is stored, made when it’s acquired and updated whenever the arrangement changes. It has to rule out storage in a related party’s home, and its absence is one of the easier things for an auditor to catch.
No key terms start with this letter
No key terms start with this letter
No key terms start with this letter
15% tax rate (accumulation phase)
The 15% tax rate applies to a complying fund’s investment income, like interest, dividends, and rent, while it’s in accumulation phase. It’s well below most people’s personal marginal rate, which is a big part of why super remains one of Australia’s most tax-effective long-term savings structures.
45-day holding period rule
The 45-day holding period rule denies a fund’s franking credit offset if it hasn’t held the relevant shares at risk for at least 45 days around the dividend date, or 90 days for preference shares. It exists to stop funds buying shares purely to capture a credit and selling straight after. Related integrity rules, the related payment rule and the dividend washing rule, can also strip the benefit where a fund has hedged away its economic exposure or tried to generate artificial franking credits, so trustees trading around dividend dates should check their entitlement before lodging the return.
Looking Beyond the Definitions?
Now that you’ve got a better understanding of the terminology, the next step is understanding how an SMSF works in practice.
Our team helps trustees navigate the administrative, compliance and reporting requirements of running an SMSF, providing support at every stage of the fund’s lifecycle.
