Whether you’re a trustee, adviser or accountant, navigating the complex world of self-managed superannuation funds (SMSFs) requires a firm grip on the terminology. This SMSF fundamentals glossary translates key terms into clear, strategic language you can use.
Accumulation phase The period in an SMSF where members are contributing and growing their balances. Earnings are taxed at 15%, with some capital gains discounted to 10% after 12 months.
Actuarial certificate A report required when a fund has both pension and accumulation balances and uses the proportionate method to calculate ECPI (exempt current pension income).
APRA fund A fund regulated by the Australian Prudential Regulation Authority, typically industry or retail funds. SMSFs are regulated by the ATO.
ATO (Australian Taxation Office) Regulator of SMSFs and enforcer of compliance obligations.
Binding death benefit nomination (BDBN) A direction given by a member to the trustee on how to pay their superannuation benefits upon death. Often problematic in SMSFs due to deed compatibility and lapsing.
Carry-forward concessional contributions Allows members with less than $500,000 total super balance to carry forward unused concessional contribution cap amounts for up to 5 years.
Commissioner of Taxation Holds power under the SIS Act to enforce compliance, issue penalties and accept enforceable undertakings from SMSF trustees.
Concessional contributions (CCs) Pre-tax contributions such as employer SG and personal deductible contributions. Cap: $30,000 per year (2025–26).
Contributions splitting Allows up to 85% of concessional contributions to be allocated to a spouse’s account.
Deed of variation A legal document used to update or modernise the governing rules (trust deed) of an SMSF.
Division 293 tax An additional 15% contributions tax for individuals with income and concessional contributions over $250,000.
Division 296 tax A new 15% additional tax on earnings where a member’s total super balance exceeds $3 million (applies from 1 July 2025).
ECPI (exempt current pension income) Portion of fund earnings exempt from tax when supporting retirement-phase income streams.
Excess contributions Contributions above the concessional or non-concessional caps. May attract additional tax or be withdrawn.
Investment strategy A trustee-prepared document outlining how the SMSF will invest its assets, considering diversification, liquidity, insurance and risk tolerance.
LRBA (limited recourse borrowing arrangement) A structure that allows an SMSF to borrow to acquire a single acquirable asset (e.g. property) using a holding trust. Strict compliance requirements.
Lump sum withdrawal Payment from an SMSF account to a member (once condition of release met) that is not in the form of a pension.
Member balance The total value of a member’s entitlements within the SMSF, including accumulation and pension interests.
Minimum pension drawdown The legislated minimum amount that must be paid annually from an account-based pension, based on age.
Non-concessional contributions (NCCs) After-tax contributions. Cap: $120,000 annually, or up to $360,000 under the bring-forward rule (total super balance limits apply).
Pension phase The phase where a member has met a condition of release and receives a retirement-phase income stream. Earnings are generally tax-free.
Prohibited acquisition An SMSF is restricted from acquiring assets from related parties unless they are listed securities, business real property, or in-house assets within the 5% limit.
Related party Includes members, relatives of members, and entities controlled by either. Impacts investment rules and in-house asset tests.
SIS Act & SIS Regulations Superannuation Industry (Supervision) Act 1993 and associated Regulations. The foundational laws governing SMSFs.
Sole purpose test A central rule that an SMSF must operate solely for the purpose of providing retirement or death benefits to members or their dependants.
TBAR (transfer balance account report) A report provided to the ATO documenting events that affect a member’s transfer balance account (e.g. commencement of retirement phase pensions).
TBC (transfer balance cap) The maximum amount a member can transfer into the tax-free pension phase. TBC for 2025–26: $2 million.
Trustee declaration A document that trustees must sign acknowledging their obligations under super law within 21 days of appointment.
Trustee minutes Records of trustee decisions, especially around investment purchases, contributions, benefit payments and resolutions.
TSB (total super balance) A member’s total balance across all super funds used to determine eligibility for contributions caps, bring-forward, catch-up, and other strategies.
Unlisted unit trust A structure often used by SMSFs for property development or joint investment, subject to SIS Regulation 13.22C conditions.
Voluntary contributions Any member contribution made beyond the SG by choice, including personal, spouse and non-concessional contributions.
