The Rudd government’s changes to the concessional and non – concessional superannuation contributions caps may cause some people who are contributing extra to their super to be hit with excess contributions tax. A recent report in the Financial Review explored this problem and suggested people who have been making additional payments, review their current years contributions to date, and determine if they may be in breach of the legislation.

 

People most at risk are those over the age of 50 who had arranged salary sacrifice of super contributions in prior years based on the old cap of $100,000.These people may be at risk of contributing too much to their super fund this year, and therefore attract the tax penalties up to 93% on the excess contributions.

 

There is also an issue if you have multiple employers as each are required to contribute the 9% SG for you. You will need to include all contributions from each employer to determine whether you have or will breach the cap before June 30 2010.

 

The caps for the 2009/2010 financial year are as follows:

Contribution	Cap	Excess Contributions Tax
Concessional Contribution
Under age 50	$25,000 pa	31.5% on excess contributions + 15% on all contributions
Age 50 - 65	$50,000 pa (until 2011/2012)
Non-Concessional Contributions
Under age 50 age 50 - 65	$150,000 pa, or $450,000 over 3 years	46.5%

If you have any doubts as to whether you may have exceeded your contributions cap for the 2010 financial year, now is the time to find out. If you do exceed the caps, you should contact us immediately to try and remedy the situation for you. Once 30^th June 2010 rolls over, you may be left with a hefty tax bill.