Superannuation rules in effect for the 2018/19 financial year continue to limit the amount of money Australians can contribute into superannuation. These are summarised below:
Concessional (tax deductible) contributions
Concessional contributions (which include personal deductible contributions, employer contributions and salary sacrifice contributions) are limited to $25,000 per annum.
Employees can now choose to either contribute to super via pre-tax salary sacrifice which reduces their taxable income, or elect to claim a tax deduction for post-tax contributions.
Individuals aged 65 to 75 must pass a work test to be eligible to make a personal contribution into super.
Individuals aged more than 75 are not eligible to make deductible personal contributions.
Non-concessional (non-tax deductible) contributions
From 1 July 2017, there are further restrictions on being able to make non-concessional contributions to super.
Individuals with more than $1.6 million in super, measured on 30 June immediately before the financial year of the contribution, are not allowed to make any more non-concessional contributions.
Individuals with less than $1.6 million in super can contribute up to $100,000 per annum in non-concessional contributions, or $300,000 under the bring-forward rule over 3 years, subject to transitional rules.
Low income superannuation tax offset (LISTO)
Eligible individuals with an adjusted taxable income up to $37,000 per annum, where at least 10% of total income is from business or employment, will receive a LISTO contribution from the government to their super fund. The LISTO contribution will be equal to 15% of their total concessional (pre-tax) super contributions for an income year capped at $500.
Government co-contribution:
Individuals may be eligible for a super co-contribution from the Government of up to $500 where they:
- are currently working;
- have less than $1.6 million in super;
- make a non-concessional contribution to super (without exceeding their non-concessional cap for the year); and
- have total income up to $52,697 this year.
Spouse contributions
If your partner’s relevant income is $37,000 or less, they have less than $1.6 million in super and haven’t exceeded their non-concessional cap for the year, you could qualify for a tax offset of up to $540 on the first $3,000 you contribute to superannuation for them from your after-tax income.
This tax offset decreases as your partner’s income increases above this level and phases out when their income reaches $40,000.
Additional tax on concessional contributions for high income earners:
If your income plus concessional contributions (within cap limits) exceed $250,000 pa, an additional 15% contributions tax will be levied on contributions that are above the $250,000 threshold.
Penalties for exceeding contribution caps
(i) Excess concessional contributions
Excess concessional contributions, plus an excess concessional contributions interest charge, are taxed at a person’s marginal tax rate (including the 2% Medicare levy) reduced by a 15% tax offset.
You can elect to have up to 85% of the excess contributions released from your super fund, or you can leave the amount in the fund, where it will be included in your non-concessional contributions cap (thereby effectively being counted twice).
(ii) Excess non-concessional contributions
Excess non-concessional contributions are taxed at 47% where they remain in the super fund. The tax liability must be withdrawn from the fund.
You can elect to release from the super fund the excess non-concessional contributions, plus 85% of an associated earnings amount, to avoid paying the 47% tax. In this situation, the associated earnings amount is treated as assessable income and taxed personally at your marginal rate, less a 15% tax offset.
