The Australian Taxation Office (“ATO”) has released the superannuation contributions caps for the 2012/2013 year which we have set out below. In this article we explore the types of contributions that can be made to superannuation and the caps that set a limit on the amount of contributions an individual can make in any year.
What contributions can I make to superannuation?
Superannuation contributions can be divided into two types:
concessional (before-tax); and
“Concessional contributions” are contributions that receive special tax treatment. They include:
compulsory Superannuation Guarantee contributions by an employer; and
any salary sacrificed contributions deducted from an employee’s before-tax salary.
For individuals who:
are not employed;
receive 10% or less of their income from an employer;
these individuals can make concessional contributions and claim them as a tax deduction.
“Non-concessional contributions” are contributions made to superannuation from after-tax income. These contributions are not taxable in the superannuation fund.
What are the caps on my superannuation contribution?
Both concessional contributions and non-concessional contributions are subject to a contributions cap which sets a limit on the amount of contributions that can be made by an individual in any one year.
If the cap is exceeded the excess contributions are likely to be subject to penalty tax..
Concessional Contributions Cap
Transitional Cap for Over 50’s
Non-Concessional Contributions Cap
Bring Forward Rule
Age 65 to 74 – Work Test
An individual aged 65 or over planning on making superannuation contributions must satisfy a work test, that is they must be gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in the financial year in which the contribution is made.
Age 75 or over
Once you turn 75 years old, you are generally unable to make any super contributions. However, your fund can accept employer contributions your employer is required to make under an industrial award or agreement.
For advice and assistance in these matters please call our Estate Planning Team.