IMPORTANT INFORMATION

This important information relates to making additional superannuation contributions. It is important for you to consider your own personal financial circumstances, objectives and needs. If you would like someone to help you before making additional contributions you should speak with a financial planner. To speak with an EISS Super Financial Planner please contact us.

Contribution Caps

Superannuation plays an important part in securing the type of lifestyle you want in retirement. Apart from the compulsory super contributions made by your employer (called Superannuation Guarantee or SG), you can contribute extra to your super to help increase your savings for the future. However, there are limits on how much you can contribute before you pay extra tax.

The different limits (known as caps) depend on the type of contributions made into your super fund. There are two types of caps, a concessional contributions cap (contributions paid before tax) and a non-concessional contributions cap (contributions paid after tax).

Tax on contributions

The tax paid on contributions depends on the amount and type of contribution as well as your income. Tax is deducted after the contribution is received. There are limits on how much you can contribute and if you exceed these limits you may pay extra tax.

Concessional (before tax) contributions

Concessional (before tax) contributions include: Superannuation Guarantee (SG) contributions, salary sacrifice contributions, award contributions and any contributions for which you intend to claim a tax deduction (including as a self-employed person). These contributions are taxed at 15% when allocated to your account.

The concessional contributions cap is $27,500 per financial year. If you exceed this cap, the excess is included in your income tax return and taxed at your marginal tax rate less an offset of 15% for tax already paid.

You can have up to 85% of the excess amount refunded or retain the amount in your account. If you retain the excess amount in your account, it will count towards your non-concessional contributions cap. You may also incur an excess interest charge.

Unused concessional contributions cap carry-forward

You may be able to increase your concessional contributions in a financial year by applying previously unused concessional contributions cap amounts. The following rules apply:

  • You can start accruing unused concessional contribution cap amounts from 1 July 2018,
  • You can access carry forward unused cap amounts if your total super balance was less than $500,000 on 30 June of the previous financial year,
  • You can carry forward unused cap amounts for up to five financial years.

High Income Contributions Tax

If your taxable income plus any reportable fringe benefits, net investment losses and certain super contributions is greater than $250,000 in a financial year, you will effectively pay an additional 15% tax on concessional (before tax) contributions up to the concessional contributions cap. If your income, excluding your concessional (before tax) contributions, is less than $250,000, but the inclusion of your concessional (before tax) contributions causes your income to exceed this threshold, the additional tax will only apply to the portion of your concessional (before tax) contributions that are above $250,000.

Non-concessional (after tax) contributions

Non-concessional (after tax) contributions include personal and spouse contributions. These contributions are not taxed when allocated to your account.

There is a cap on the amount of non-concessional contributions that you can make in a financial year. The non-concessional contributions cap is $110,000 per financial year.

You are eligible to make non-concessional contributions and bring forward future years’ contribution amounts providing that:

  • the total amount held by you across all super and pension accounts is less than $1.7 million;
  • you have not already brought forward the full future amounts allowable; and
  • where you are over age 74 (age 67 prior to 1 July 2022) you satisfy the work test, however you cannot bring forward future contributions.

Total balance held in super and pension

Total balance on 30 June of previous year

Maximum Non-concessional contributions cap for the first year

Bring-forward period

< $1.48m

$330,000

3 years

$1.48m to < $1.59m

$220,000

2 years

$1.59m to < $1.7m

$110,000

No bring-forward period, general non-concessional contributions cap applies

$1.7m or more

Nil

n/a

 

 

If you exceed this cap, you can elect to have the excess amount refunded and 85% of any associated earnings. The full amount of associated earnings will be added to your assessable income and taxed at your marginal tax rate with a 15% tax offset.

If you choose not to have the excess refunded then the excess will be taxed at the highest marginal tax rate which is currently 47% (this includes the Medicare levy of 2%).

For confirmation of your year to date contributions in your account with us, please contact us.

 

 

This information is current as at the date of issue, of a general nature only and has been prepared without taking account of your objectives, financial situation or needs. Before acting on this information or making an investment decision about whether to acquire, hold or sell a financial product, you should consider its appropriateness having regard to your financial objectives, situation and needs and read the relevant Product Disclosure Statement, available at eisuper.com.au/pds or by contacting us on 1300 369 901. You should also consider obtaining financial, taxation and or legal advice which is tailored to your personal circumstances before making a decision.