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In this superannuation guide we explain superannuation cpas and how they shape your investment and taxes.
There are caps on the amount you can contribute to your super each financial year to be taxed at lower rates. If you contribute over these caps, you may have to pay extra tax.
The cap amount and how much extra tax you have to pay depends on your age and whether the contributions are:
Concessional contributions are made into your super fund before tax.
Concessional contributions include:
Once the concessional contributions are in your super fund, they are taxed at the 15% rate.
There are caps on the concessional contributions you can make each financial year. If you go over the cap, you may have to pay extra tax.
When working out your super contributions for the financial year, remember: contributions don't count when the payment is sent, they only count once the payment is received by your fund.
Make sure your fund receives all your contributions by 30 June.
Note: if you split your before-tax contributions and give some to your spouse, these contributions still count towards your concessional cap.
Your age affects your concessional contributions cap, how the cap applies and what options you may have.
|Income year||Your age at this date||Your concessional contribution cap||Treatment of excess concessional contributions|
|2016–17||30 June 2016||<49||$30,000||Included as taxable income, taxed at marginal tax rate plus an excess concessional contributions charge|
|2015–16||30 June 2015||<49||$30,000|
|2014–15||30 June 2014||<49||$30,000|
|2013–14||30 June 2013||<59||$25,000|
|2012–13||All ages||$25,000||Taxed at 46.5%|
(15% levied in super fund, additional 31.5% payable)
You will also pay extra tax on your concessional contributions for Division 293 if your income for surcharge purposes, including certain concessional contributions, is over $300,000.
Division 293 tax levies 15% tax on taxable contributions above the $300,000 threshold.
If you salary sacrifice into super, these amounts count towards your concessional contributions cap, in addition to your employer's contributions (such as compulsory employer contributions).
If you make super contributions under a salary sacrifice agreement, the sacrificed amount is paid into your fund by your employer and is treated as an employer contribution.
The sacrificed amount counts towards your employer's compulsory super contribution obligations.
If your salary sacrificed super contribution is over the super guarantee amount your employer is required to pay (for 2016–17 it is 9.50% of your ordinary time earnings), your employer is not required under super guarantee legislation to pay an additional amount on top.
When making planning decisions about your employer contributions, it is also important to consider when these contributions are received by your super fund.
Contributions don't count when the payment is sent, only once the payment is received by your fund. Make sure your fund receives all your contributions by 30 June.
Your employer is entitled to make super guarantee contributions for the quarter ending on 30 June by 28 July (the next financial year).
It's up to you to keep track of contributions you, your employer, or others make on your behalf to your super account.
Keeping track of the amount of contributions and when they were received by your super fund is important – it can help you avoid going over contributions caps and paying extra tax.
Example: Fund receives cheque in next financial year
Suzette salary sacrifices $100 a fortnight. Her employer puts aside the amount each pay, then pays the amount, along with their super guarantee obligations, on the last day of the quarter by posting a cheque to the super fund.
It generally takes between one and two working days for the super fund to receive the cheque. As a result, although the amounts deducted from Suzette’s salary between 1 April and 30 June are sent on 30 June, the contribution is not received by the super fund until the next financial year.
This contribution will count towards Suzette's concessional contributions cap for the following year.
The following suggestions may help you keep your super contributions below the concessional contributions cap and prevent you having to pay additional tax.
Ø Stop or reduce any pre-tax voluntary contributions to your super – however, your employer can't change compulsory super guarantee amounts or amounts paid under a contract or industrial agreement
Ø Delay making any personal super contributions you intend to claim as a deduction in your tax return.
Check if your employer pays costs, such as super administration
fees and insurance premiums on your behalf to your fund – these
count towards your concessional contributions cap.
If you are eligible to claim an income tax deduction for your personal super contributions, only the amount the ATO allow as a deduction will count towards your concessional contributions cap.