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
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 $25,000. This is called a concessional contribution cap. It means contributions made within this limit will benefit from the 15% tax rate. Any contributions in excess of this amount may be subject to higher tax.
- Employer contributions, such as:
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
Carry forward contributions
From 1 July 2018, if your superannuation balance is less than $500k, you will be able to make 'carry-forward' concessional super contributions. This means that you will be able to access your unused concessional contributions cap in future years.
The first year in which you can use a 'carry-forward' cap will be in the 2019-20 financial year, so you cannot make use of it yet, but it is handy to know. Amounts carried forward that have not been used after five years will expire.
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 2017/2018 year is $100,000 with "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 three years’ of non-concessional contributions from future years. If you’re under the age of 65, you may be able to bring forward three years of non-concessional contributions, making it possible to make up to $300,000 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 $100,000 cap.
- Superannuation rollovers
- Superannuation customer investment choice selections
- Selecting an appropriate super contribution amount versus paying down debt
- Spouse contribution splitting
- General advice on retirement strategies
- Selection of insured benefit levels
- Salary sacrifice and additional voluntary contributions
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