A Time for Review
The Concessional (before tax) contributions caps have been changed for the 2013/14 financial year, now is the time to review your salary package.
There are two main types of contributions – concessional before tax and non-concessional after tax contributions. Each type of contribution has their own cap limiting the amount that can be contributed into superannuation in any one year. The following information focuses mainly on the Concessional (before tax) contributions.
For the 2013/14 financial year, there are two concessional contributions caps:
- $25,000 cap for anyone aged 59 or under
- $35,000 cap for anyone aged 60 or over.
Concessional contributions are made up of your employment Superannuation Guarantee 9.25% Contributions, additional employer contributions and all salary sacrifice contributions made under your employment agreement.
It also includes any personal concessional contributions. If you are self-employed and/or earn a proportionately small amount of your assessable income from employment (the 10% rule) then you can also make concessional contributions and claim a tax deduction in your personal tax return.
When reviewing your own situation you need to consider the following rules and thresholds:
- Concessional Contributions are taxed within the super fund at 15%.
- If you earn over $300,000 (including concessional contributions) your concessional contributions are taxed at 30%.
- If you earn less than $37,000, your super fund will get a refund of the 15% tax paid on contributions.
- If you earn less than $33,516, and you make after tax contributions, you can receive a government co-contribution of up to $500.
NOTE 1: If you are over 65, you must satisfy a work test in order to make personal contributions.
NOTE 2: Since 1st July 2013, regardless of your age, your employer must make SG Contributions if you are eligible.