Defined benefit contributions (also known as notional taxed contributions) are notional employer contributions that are determined in accordance with the Income Tax Assessment Regulations 1997 (ITAR 1997). Every year, the trustees of relevant defined benefit schemes calculate defined benefit contributions for each member using the methods prescribed by the tax legislation and scheme specific actuarial factors, called the New Entrant Rates (NER).
For members of the Commonwealth Superannuation Scheme (CSS), Public Sector Superannuation Scheme (PSS), Military Superannuation and Benefits Scheme (MSBS or MilitarySuper), and the Defence Force Retirement and Death Benefits Scheme (DFRDB), the methodology can be found at Schedule 1AA of the ITAR 1997.
The calculation of defined benefit contributions is complex and may be different to the way benefits are determined under the rules of the defined benefit scheme. Therefore, your notional defined benefit contributions may be very different to the defined benefit growth you see on your annual member statements.
Prior to 1 July 2017, defined benefit contributions were only used for the purposes of Division 293 tax. However, they now also count towards your annual concessional contributions cap for financial years starting on or after 1 July 2017.
See also Concessional Contributions Caps and Division 293 Tax