Contribution limits explained

A little goes a long way…

When securing your lifestyle for retirement, superannuation plays an important part. We’re here to help simplify the ways you may choose to make additional contributions in addition to the Superannuation Guarantee (SG) contributions made by your employer. By contributing a lump sum or even small amounts over time can help significantly boost your super and have tax saving implications as well.

Each year the government applies a limit on the amount you can contribute to your super without paying extra tax. We’ve outlined below the new contribution caps the government has introduced from 1 July 2017 read more here.

On 1 July 2017, the before-tax (concessional contributions cap) was reduced to $25,000 per annum and after-tax (non-concessional contributions cap) was lowered to $100,000 per annum.

How can I grow my super?

Before-tax contributions

(otherwise referred to as “concessional contributions”)

After-tax contributions

(otherwise referred to as “non-concessional contributions”)

These contributions include payments into your super through SG (currently at a rate of 9.5% of your annual salary), salary sacrifice, award, voluntary employer and tax-deductible personal contributions and are taxed at a rate of 15%.

If you exceed this before tax (concessional contributions cap) of $25,000, you will receive a notice of excess contributions assessment from the ATO and the excess contributions will be included in your assessable income for the corresponding financial year and taxed at your marginal tax rate plus the Medicare Levy (less a 15% offset).

From 1 July 2018, if you have not reached your before tax contribution limit in a financial year you may be able to ‘carry forward’ any unused sums of money for a rolling 5 year period provided you have a total super balance of less than $500,000 before the start of the new financial year.

Your total super balance is a total of all your super accumulation account balances and income stream account balances (if you have any) less any structured settlement contributions (e.g. a compensation payment for a personal injury suffered by you).

These contributions include any spouse/partner and additional contributions made by you from your take home pay. No tax is payable when these contributions are made to your super account.

On 1 July 2017, the after-tax (non-concessional contributions) cap was lowered to $100,000 per annum. There are some additional rules around this such as:

If you are under the age of 65 you will be eligible to ‘bring forward’ up to 3 years of after-tax (non-concessional contributions) i.e. up to $300,000 if you have not made any after-tax contributions over the past 3 years. However, this will be limited to :

  • 2 years of after-tax contributions if your total super balance is between $1.4 - $1.5 million
  • 1 year of after-tax contributions if your total super balance is between $1.5 - $1.6 million
  • No after-tax contributions if your super balance is greter than $1.6 million.

Government co-contributions

Based on your income you may be eligible to receive a co-contribution from the government if you make an after-tax contribution to boost your super. Read more here.

We know this new legislation can be confusing and difficult to navigate, we’re here to help! Speak to a Financial Planner today to discuss strategies relevant to your personal circumstances, ensuring the best possible retirement outcome for you and your family.

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Your Super for Life

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Need help?

Financial planners#, Maria Ganakas and Noel Hazeldine can help you decide if a salary sacrifice strategy could work for you.

How far will your super go?

Will you have enough super to last you? Use the super calculator as a guide to see how making extra contributions along the way can make a difference.

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