It is important for everyone to understand how much they can contribute to their super fund either the concessional and non concessional contributions amount as any amount above the super cap will be taxed at the marginal rate with excess concessional contribution charge.
Concessional contributions are made up of:
- employer contributions as result of the current superannuation rate on your salary. Salary sacrifice amount are included under employer contribution
- personal contribution to superannuation claimed as a tax deduction by self employed
Concessional Contribution Cap 2018
The new cap of $25,000 applies for all ages.
Concessional Contribution Cap 2017
If aged below age 49, the limit is $30,000 and if person is aged above 49 years old, $35,000.
Catch Up Concessional Superannuation Contributions (only from 2018 onwards)
From 1 July 2018 onwards for those with Super balance under $500,000. Federal Government introduced a catch up mechanism where individuals can use their unused caps from prior years on a 5 year rolling basis. This is designed to encourage savings for those that have lumpy income. What this means is that if your only use $10,000 of your cap in 2018. The remaining $15,000 will be transferred to the year after and last for 5 years. This allows greater flexibility in superannuation contribution.
Any unused amount below the cap prior to 2018 does not count.
Concessional Contribution Cap 2016
If aged below age 49, the limit is $30,000 and if person is aged above 49 years old, $35,000.
Concessional Contribution Cap 2015 – same as above.
If individuals put more in the superannuation fund above the cap limit, then the amount is taxed at the individual marginal tax rate as well as an excess charge.
The ATO has provided a annualized and daily rate of the excess concessional contribution charge rates.
Non concessional contribution cap are the contributions made to super using income that has already been taxed at the individuals marginal rate. This means no tax is deduced from the amount contributed to super.
There can be tax advantages from income earned from investing in shares will be taxed at the 15% fixed rate rather than individuals marginal rate (inclusive of medicare levy)
related: see our analysis of the ASX20 Index which goes in depth on largest 20 companies in Australia.
Excess concessional contribution charge rates
[etable caption=”” width=”500″ colwidth=”20|50|50″ colalign=”left|left|left|left|right”]
Quarter,Annual rate,Daily rate
January – March 2016,0.0522,0.00014262295081967
October – December 2015,0.0514,0.00014082191780822
July – September 2015,0.0515,0.00014109589041096
April – June 2015,0.0536,0.00014684931506849
January – March 2015,0.0575,0.00015753424657534
October – December 2014,0.0563,0.00015424657534247[/etable]
Non Concessional Contribution Cap
The Australian government announced in the 2016 Federal budget that Australians are subject to a lifetime non-concessional cap of $500,000.
Previously years, non concessional contribution cap 2015 was $180,000 which includes a bring forward rule where individuals can bring forward up to $540,000 over a 3 year period under 65 years old. This rule will be scrapped with the above rule if the Coalition wins the election.