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Superannuation contribution caps – what you need to know

Superannuation is an area that is constantly changing and keeping up can be difficult.

An important superannuation issue to be aware of is contribution caps.

CVW Accounting are committed to helping you achieve the best result for your SMSF and yourself.  If you need  additional information, advice or help, please contact us any time.

What is a superannuation contribution cap?

The Australian taxation and superannuation systems are geared to provide tax benefits and concessions to those who contribute to their superannuation while working.

No matter the type of super contribution there is an annual limit on how much of that type of super contribution can be made. Making a contribution over the cap will incur a penalty unless the amount is withdrawn. These limits are known as contributions caps.

What is the difference between a concessional and non-concessional superannuation contribution?

There are two types of superannuation contributions;

Concessional – when you, or your employer, makes a before-tax contribution

Non-concessional – when you, your spouse or the federal government makes an after-tax contribution

How do superannuation contribution caps work?

There are two types of caps – a concessional contribution cap and a non-concessional contribution cap.

The cap amount depends on;

  • your age,
  • salary
  • types of contributions made

As at 1 July 2017, the general concessional contributions cap was set at $25,000 for all individuals regardless of age. At the same time, non-concessional contributions cap was reduced to $100,000 for members 65 or over but under 75. If you are under 65 years of age, you have the option of contributing up to $300,000 over a three-year period, depending on your total superannuation balance. Chat to CVW Accounting about your options.

2017/2018 2018/2019
Concessional cap $25,000 $25,000
Non concessional cap $100,000 $100,000

 

What do I do if I have paid too much into my SMSF?

Firstly, don’t panic! But it’s important to take action.

If your before-tax contribution is over the cap, consider withdrawing up to 85% of the excess.

In cases where your after-tax contribution is over the cap, look into the bring forward rule.

The CVW Accounting team can provide relevant advice to assist you take action.

How are my contributions impacted if I’m over 65?

If you are aged between 65 -74 years, you can only make after-tax super contributions if you have been employed for at least 40 hours over 30 consecutive days of the financial year.

Talk to the CVW Accounting team about how salary sacrificing, and transitional rules may impact your SMSF. We are happy to help.

 

This blog was first published in October 2012 and updated in March 2019.

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