Definitions

The Australian Taxation Office has released a list of superannuation related definitions in Plain English. You can view these definitions on their website.

The following are definitions for many of the terms you may see on our website:

ABN:

Australian Business Number. This number is your fund's identifier for dealing with certain areas of the ATO.

APRA:

Australian Prudential Regulation Authority. Self managed superannuation funds used to be regulated by APRA. They are now regulated by the ATO.

ASIC:

Australian Securities and Investments Commission. This is the government body responsible for collecting information on companies and other incorporated bodies in Australia. If you have a corporate trustee, you will need to need to complete annual reporting requirements with ASIC for your company.

ATO:

Australian Taxation Office. This is the government body responsible for regulating self managed super funds.

Audit:

A studying of your financial affairs to check that your financial accounts and tax return are correct, and to ensure that you are keeping the required records and minutes.

Arm's Length Transaction:

A transaction made on a commerical basis where the fund did not receive or give favourable treatment (ie market values were used, money exchanged hands, etc).

Beneficiary:

A person entitled to or in receipt of a benefit. Your beneficiary is who you would like your super benefits to be paid to on your death.

Complying Superannuation Fund:

A superannuation fund that has elected to be a regulated super fund under the Superannuation Industry (Supervision) Act 1993. (See Regulated Superannuation Fund)

Dependant:

A dependant is :

Your spouse or de factor
An ex-spouse
A child under the age of 18
Any person who is financially dependant on you
Any person whom you have an interdependency relationship with

ETP:

Eligible termination payment. In regards to super funds, these are any payments made by the fund to a member except those taken as a pension. ETPs are not necessarily made at the time of termination of employment or retirement, and will affect a members RBL.

In-house Asset:

An asset which is a loan to, and investment in, or a lease with a related party. A fund must not have in-house assets which make up more than 5% of the fund's total assets.

Member:

A person who receives a benefit from the fund or who has deferred his/her entitlement to receive a benefit from the fund.

RBL:

Reasonable benefits limit. The RBL determins the maximum amount of benefits which a person is entitled to receive during their lifetime which is taxed concessionally. For 2006/07 these limits are:

Lump Sum RBL $ 678,149

Pension RBL $1,356,291

(The pension RBL limit applies when 50% or more benefits are taken out as a complying pension). In the May 2006 Budget, the Treasurer proposed to abolish RBLs from 1st July 2007.

Regulated Superannuation Fund:

This is a superannuation fund which either:

Has a corporate trustee; or
Whose sole or primary purpose is to provide old-age pensions

and whose trustee has elected for the SIS Act to apply.

Related Party:

A member of the superannuation fund, or a relative or associate of a member of the fund, or an employer of a member of the fund.

SIS Act (also SISA):

Superannuation Industry (Supervision) Act 1993. This is the main regulating legislation for all superannuation funds.

SMSF:

Self managed superannuation fund. For a more detailed explanation of what a self managed super fund is, please see our DIY Super page.

Sole Purpose Test:

Generally, this test measures that a fund does exist primarily to provide retirement benefits for its members and excludes the fund from carrying on a business.

Trustee:

The trustee is the person or entity who owns the super fund's assets for the benefit of the members, and is responsible for the administration and compliance of the fund, and providing the members of the fund with the prescribed information under the SISA in the prescribed time.