We can help you find your Lost Super

It's Easy


Register your details below and we'll contact
you within one business day.

Your Name
Your Email
Phone Number
Your Comments

Book a Skype Chat


Register your details below and we'll contact
you when it suits you.

Your Name
Skype Username
Phone Number
Your Email
Preferred Time
Your Comments

Whats Skype? Learn More

Make an Enquiry


Register your details below and we'll contact
you within one business day.

Your Name
Your Email
Phone Number
Enquiry Type
Preferred Time
Your Message

Book a no-obligation consultation


Register your details below and we'll contact you within one business day to set up your no-obligation consultation.

Register below to receive our FREE email newsletter




Blog

June 29th, 2012
Beware of the super contributions tax

The ATO will impose a penalty known as excess contributions tax if you exceed either the concessional or non-concessional caps in a given financial year. The penalty tax is imposed on the individual rather than the super fund, although the tax can be deducted from the individual’s super account.

First off let’s look at the two different ways of contributing to super.  Concessional  Contributions are those contributions made before tax; such as your employers SG and salary sacrifice.  Non concessional  contributions are made after tax i.e. if you contribute from your bank account without claiming a tax deduction.

 

The caps are as follows;

Concessional Contributions Cap

Is now $25,000 irrespective of age

Non Concessional Cap

$150,000 in a financial year or members under age 65 can bring forward 2 future years i.e 450,000

 

In this blog we will take a look at the implications if the caps are exceeded. 

For concessional contributions, every dollar that exceeds the cap will be taxed at 31.5%. This tax is in addition to the 15% contributions tax deducted by your super fund upon receipt of the contribution, thus the total tax will be 46.5 cents in every dollar you contribute that exceeds the cap.

Similarly, non-concessional contributions attract an excess tax of 46.5% where the cap is exceeded in a given financial year. However, as non-concessional contributions are made from after-tax income, your super fund will not deduct an additional contributions tax of 15%.

But it doesn’t stop here…

Consider a scenario where you have contributed the maximum amounts under both caps (a common scenario for those nearing retirement). Under the current rules, if you exceed your concessional cap, the excess amount is then added to your non-concessional cap. But as you have already taken full advantage of your non-concessional cap as well, this amount also becomes an excess contribution under your non-concessional cap. In simple terms, this means the excess amount will be subject to excess contributions tax under both caps which amounts to 93%!


Is this blog posted before or after 1 July 2012? This is correct if posted after 1 July 2012, otherwise it needs to be clarified.

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to be notified of new blog posts


 

Book a
Skype chat
Make an
enquiry




Arrange a Skype Chat



Register your Skype details and your
preferred time for a chat. We'll get back to you
as soon as possible.

Your Name
Skype Username
Phone Number
Your Email
Preferred Time
Your Comments
I would like to thank you and PFG staff for a wonderful surprise card and gift card from you for my birthday, it’s just a lovely warm gesture much appreciated!! Thank you all from the bottom of my heart.

Teresa Boscaglia

Accredited by AMP Financial Planning
PFG Financial Services Pty Ltd ABN 23 052 977 189 and PFG Global Pty Ltd ABN 50 679 416 839 trading as PFG Financial Services (Global) are Corporate Authorised Representatives and Credit Representatives of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706. For further details including financial services we can offer you and how we are renumerated, please read the Financial Services & Credit Guide V 5.0 & FPFG Global Pty Ltd Financial Services & Credit Guide V 5.1 General Advice Warning: This website contains general information only. It does not take into account your objectives, financial situation or needs. Please consider the appropriateness of the information in light of your personal circumstances.