Super Contributions and Tax
Types of super contributions
You should be aware of the different ways you can contribute to super as each method is subject to different rules.
|Types of Super Contributions||Tax|
||15% up to the cap
||No tax up to the cap
Concessional versus non-concessional super contributions
Concessional contributions include employer contributions and salary sacrifice contributions, as well as deductible contributions made by self-employed workers.
Concessional contributions are taxed at 15%. For example, a contribution of $1,000 to your fund will have $150 deducted for tax, leaving $850 to be invested in your super fund.
There is a cap of $25,000 for the 2012/2013 tax financial year (including your employer’s compulsory superannuation guarantee (SG) payments). From 1 July 2014 people aged 50 and over can contribute up to $35,000 (including the compulsory SG payments). If you exceed these caps, you may have to pay additional tax of 30% plus Medicare levy.
(N.B. There may be additional tax payable for concessional contributions if your superfund does not have your tax file number recorded).
Non-concessional contributions include your after-tax contributions such as non-deductible personal contributions and spouse contributions.
These are also called after-tax contributions because you’ve already paid income tax on the money before contributing it to your super.
No tax is payable on non-concessional contributions as long as the total of these contributions each year is below a set cap ($150,000 for the 2013/2014 tax year). Exceeding this cap will attract an extra 45% tax plus Medicare levy.
(N.B. if you are under age 65 at any time during the financial year, you may be able to bring forward two additional future years of contributions to make a larger one off contribution. This therefore enables you to contribute up to $450,000 in a single year; however, you will not be able to make further contributions for the next two financial years).