There are limits on how much can be contributed each financial year. If you exceed these limits, you will be subject to additional tax. The limits are often referred to as contribution caps and are increased periodically.
For 2017/18 the basic limits are:
Concessional contributions : $25,000 pa
Non-concessional contributions: $100,000 pa - for those with less than $1.6m in super at 30 June 2017
$nil - for anyone with $1.6m or more in super at 30 June 2017
The amount you have in super for this purposes is a figure called your "total superannuation balance". It is generally just the amount that appears on your member statements from all your superannuation funds but for some people (eg those with special superannuation arrangements called defined benefits) it is calculated using a formula.
For some people it is possible to contribute more than 1 years' worth of non-concessional contributions in a single year. This is called a "bring forward" (because you are bringing forward future limits to the current year).
From 1 July 2017 your ability to "bring forward" future years' contribution limits depends on several things:
For example, if you had less than $1.4m in super at 30 June 2017, had not started a bring forward in 2015/16 or 2016/17 and meet all the other conditions to do so now, you could contribute up to $300,000 in non-concessional contributions 2017/18. You would be bringing forward the next 2 years' contribution limits and could not make any more non-concessional contributions until 1 July 2020.
If, on the other hand, you had between $1.4m and $1.5m in super at 30 June 2017, you could only bring forward one year's contribution limit. In other words you could contribute up to $200,000 and then start again at 1 July 2019.
The rules for bringing forward future years' limits are complicated - you should seek advice if you wish to use them.
What happens if you exceed the limits?
The treatment is different depending on whether you exceed the limit on concessional contributions or non-concessional contributions.
Exceeding the limit on concessional contributions
The excess is counted as personal assessable income and taxed at your marginal rate plus some additional charges. You receive a tax offset to reflect the 15% tax paid on these contributions by the super fund. You can elect to withdraw the excess from your fund. If you elect not to, it will also count towards your non-concessional contribution cap. (Note that these rules have changed several times in recent years so this treatment will not necessarily be applicable for concessional contributions you have made in the past.)
Exceeding the limit on non-concessional contributions
The excess is taxed at 45% + Medicare (2%).
However, before levying this tax, the ATO will give you the option of having the excess contributions plus a notional amount (calculated by the ATO) to reflect investment earnings refunded to you. Instead of taxing the whole amount of the excess at the very high rates above, if you elect to refund you will only pay tax on the notional earnings. These will be taxed just like normal personal income, less a 15% tax offset.
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The limits apply to the total of your contributions even if they come from several sources. For example, if you have two jobs, the limit on your employer contributions is $25,000 in total, not $25,000 from each job. Similarly, if you’re making personal contributions and your spouse is also contributing for you, the combined limit is $100,000 pa. However, your spouse also has their own $100,000 limit if they are still allowed to contribute to superannuation. There are certain circumstances under which you can contribute more than these amounts. For example, there are special extra limits if you sell a small business or receive a compensation payment for an injury. Both have particular conditions you need to meet - talk to an adviser if you think they might be relevant for you. |
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