Concessional contributions include:
- compulsory and voluntary super guarantee contributions,
- any of the fund’s costs met by you as the employer for the employee such as super administration fees and insurance,
- salary sacrificed amounts, and
- any amount an employee is allowed as a personal super deduction in their income tax return.
The cap (or maximum) for individual contributions to superannuation has been reduced as follows:
- If you are under the age of 50 as at 30 June 2010 - $25,000, indexed (was $50,000)
- If 50 or over at 30 June 2010 - $50,000, not indexed (was $100,000) until June 2012
You should note a contribution is counted towards a cap in the year your super fund allocates it to your account, not when the contributor pays it.
Any contributions that are over the reduced cap will be taxed an additional 31.5% (in addition to the standard 15%) - a penalty worth avoiding!
Furthermore, any excess also counts towards the non-concessional contributions cap, which, if exceeded, means the tax payable could be extremely large – up to 93%!
Non-concessional contributions (NCCs) are personal contributions for which the individual does not claim a tax deduction; contributions made by a spouse; amounts in excess of the concessional contributions cap; and certain amounts transferred from an overseas pension arrangement which are not subject to tax in the fund.
You should note that the annual limit for NCCs is $150,000 (indexed) and that members under age 65 at any time in a financial year may contribute up to $450,000 by bringing forward up to two future years’ entitlements.
Any NCC in excess of this cap is taxed at 46.5%.
Please speak to us about the amount and type of contributions paid to your super fund in order not to exceed the new cap limits.
