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Super Contribution Caps

Understanding contribution caps that apply to contributions made to your super in a financial year can make all the difference to the tax effectiveness of your super and your balance at retirement. Take some time today to work out how to get the most out your super tomorrow.

Types of contributions and the caps you need to be aware of for each.

A contribution cap is the total amount you can contribute towards your super in each financial year before the tax implications change. A member whose total contributions in a year exceed the contribution caps may be liable for additional tax on the excess contributions.

Types of Contributions

 

These are the types of contributions the ATO includes in the concessional contribution cap:

  • Employer contributions, such as:
    • Compulsory Superannuation Guarantee (SG) contributions
    • Additional voluntary super contributions your employer makes at your request
    • Any fund costs paid by your employer on behalf of your super fund, such as administration fees and insurance premiums
    • The equivalent of your employer contributions under a defined benefit scheme as determined by the trustee
    • Salary sacrifice amounts
  • Personal contributions by an eligible person that are allowed as an income tax deduction
  • Transfers from reserves (defined by the regulations of the legislation)
  • The taxable component of a directed termination payment (or the total of directed termination payments plus any transitional eligible termination payments) in excess of $1 million.

TIP: Your SG employer contribution plus any Personal or Voluntary contributions have a yearly cap of $30,000. This is called a Concessional Contribution Cap. It means that to make sure you’re benefiting from the 15% tax rate, all your contributions need to be less than the cap limit (of $30,000).

Concessional Contributions Cap Amounts 2017/2018

 

Below are the concessional contribution cap amounts for the 2017/2018 financial year Please note the caps are amended annually.

Income year Under 50 49 years to 59 years* 60 years and over*
2017/2018 $25,000 $25,000 $25,000
2016/2017 $30,000 $35,000 $35,000
2015/2016 $30,000 $35,000 $35,000
2014/2015 $30,000 $35,000 $35,000
2013/2014 $25,000 $25,000 $35,000
2012/2013 $25,000 $25,000 $25,000

Note: From 1 July 2017, the general concessional contributions cap will reduce to $25,000 (subject to legislation).

 

Concessional Caps 2016/2017 year

 

Some alternative concessional contributions caps for older Australians apply in the following way for different financial years:

2016/2017 year

If you were 49 years of age or older as at 30 June 2016, then your concessional contributions cap for the 2016/2017 year is $35,000.

 

Non Concessional Caps

 

Non-concessional contributions are contributions made to your super from your after-tax income. These are subject to a contributions cap with an annual limit on the amount of non-concessional (after-tax) contributions you can make.

Be aware that there is no contributions tax applied when contributed to the super fund. Once in the fund, the normal fund tax rates apply to earnings.

The current non-concessional cap limit for the 2016/2017 year is $180,000. This is changing for the 2017/2018 year to $100,000, commencing from 1 July 2017 and bring forward cap of $300,000 moving forward.

What is the “Bring Forward Option” non-concessional contribution cap?

The bring-forward option allows you to bring forward up to two years’ of non-concessional contributions from future years. If you’re under the age of 65, you may be able to bring forward two years of non-concessional contributions, making it possible to make up to $540,000 in non-concessional contributions in a single financial year.

For example you can make $150,000 in non-concessional contributions in the first year and the balance of $150,000 over the following two years, or any financial combination that adds up to $300,000 over the 3-year period commencing 1 July 2017.

It’s important that you monitor the contributions you bring forward. If you exceed the cap, you will trigger the rule and be You don't have to do anything to have the rule triggered, except to go over your $180,000 cap.

 

We’re here to help

If you’re a Virgin Money Super customer, you can access our specialist Helpline Advice Service and gain immediate Simple Super advice from qualified financial advisers at no additional cost to you.

Financial advisers can help you with a range of enquiries including:

  • Superannuation rollovers
  • Superannuation customer investment choice selections
  • Selecting an appropriate super contribution amount versus paying down debt
  • Co-contributions
  • Spouse contribution splitting
  • General advice on retirement strategies
  • Selection of insured benefit levels
  • Salary sacrifice and additional voluntary contributions
 
 

Important stuff

The information above is intended as a guide only. If you are unsure about who you need to make contributions for we suggest you contact the ATO.

As an employer, it's important you fully understand your superannuation obligations as failure to meet these minimum requirements could mean financial penalties from the Government.

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Source: https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Super-accounts-data-overview/

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