Super Contributions – too much can mean extra tax

Written by: The Institute of Certified Bookkeepers

Super contributions – too much can mean extra tax

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 may depend on your age, which financial year your contributions relate to, and whether the contributions are:

  • concessional (before tax)
  • non-concessional (after tax)

To find out how much you contributed into your super fund to ensure you don’t go over the caps, contact your super fund.

Concessional contributions cap

Concessional contributions include:

  • employer contributions (including contributions made under a salary sacrifice arrangement)
  • personal contributions claimed as a tax deduction.

If you have more than one fund, all concessional contributions made to all of your funds are added together and counted towards the concessional contributions cap.

Excess concessional contributions from 2013–14 onwards are included as taxable income, taxed at the marginal tax rate plus an excess concessional contributions charge.

For 2012–13 and earlier years, excess concessional contributions were taxed at 46.5% (15% levied in the super fund, with an additional 31.5% payable).

Unused concessional cap carry forward

From 1 July 2018 if you have a total superannuation balance of less than $500,000 on 30 June of the previous financial year, you may be entitled to contribute more than the general concessional contributions cap and make additional concessional contributions for any unused amounts.

The first year you will be entitled to carry forward unused amounts is the 2019–20 financial year. Unused amounts are available for a maximum of five years, and after this period will expire.

Note: This Table assumes no indexing of general cap.

General concessional contributions cap

From 1 July 2017 the general concessional contributions cap is $25,000 and is indexed in line with average weekly ordinary time earnings (AWOTE), in increments of $2,500 (rounded down). From the 2017–18 financial year, the general concessional contributions cap is not calculated based on age.

The thresholds currently sit at $25,000 for all age levels, but it important to remember that the current threshold have only been in place in recent times.

Please also remember to review your unused concessional cap carry forward thresholds.

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