Over the past year there have been a number of changes in the world of superannuation which have imposed greater limitations in getting monies into super, however there is one new rule that can help get more into super.

For the 2017/2018 financial year, anyone can claim a tax deduction for contributions they make to superannuation from their own money.  These types of contributions will form part of the “concessional” contribution cap (limit of $25,000 per year).

While this new rule opens opportunities to get more money into super, there are a number of issues that should be considered prior to making any additional “concessional” contributions:

  •  The $25,000 annual cap limit includes any superannuation provided by an employer such as compulsory (Superannuation Guarantee) or salary sacrifice contributions;
  • This extra contribution will be taxed in the Fund.  For most people the rate is 15% but for some the additional tax is as high as 30%.  The additional 15% is generally only imposed for those earning salary, superannuation and other income of more than $250,000 per annum;
  • There is paperwork to do.  You will be required to submit a Notice of Intent to Claim a Tax Deduction form to ensure that the contribution is recorded as “concessional”;
  • Members over age 65 are required to meet the work test – you must work at least 40 hours in a period of not more than 30 consecutive days in the financial year in which you plan to make a contribution;
  • Members over age 75 are no longer able to make voluntary contributions;
  • It will not be worthwhile for anyone paying very little personal income tax (particularly those whose personal tax rates are less than or similar to the normal superannuation rate of 15%).

2017/2018 Contribution Caps

From 1 July 2017 the contribution caps have changed under the new Government legislation.

Concessional Contributions (CC)

These include employer contributions, salary sacrificed and personal contributions where a deduction is claimed in your personal tax return. The concessional contribution cap limit is $25,000 per annum for all individuals regardless of age.

Non-Concessional Contributions (NCC)

Voluntary contributions where no tax deductions are claimed can be contributed where your Total Superannuation Balance (TSB) is less than $1.6m. Members aged 65 or over but under 75 are able to contribute up to $100,000 per annum. Members under age 65 not only have the ability to contribute up to $100,000 per annum, but also have the ability of contributing up to $300,000 under the bring forward rule.

The bring forward of NCC available to members under 65 is outlined in the following table.
The Total Superannuation Balance (TSB) is determined on 30 June of the previous financial year.