For the 2016–17 financial year, the concessional contributions cap is $30,000 per person up to 50 years and $35,000 over 50 years.
Contributions over the cap amount are subject to extra tax. This extra tax is called the excess concessional contributions tax.
All concessional contributions to all of your super funds in a financial year are counted towards the cap. Defined benefit super interest, notional contributions are also counted towards the cap.
In the May 2016 Budget, the Federal Government announced a number of changes that will apply to concessional contributions from 1 July 2017. At the date of publication of this information, no legislation has been finalised. You should check the ATO web site for updates on these changes.
In the May 2016 Budget, the Federal Government announced that a lifetime cap of $500,000 will be introduced for post-tax (non-concessional) contributions. This new lifetime cap will replace the existing annual caps which allow individuals to make non-concessional contributions of up to $180,000 per year (or $540,000 over three years for those under age 65). If legislated, this will take effect from 3 May 2016 7:30pm (AEST) and will apply to any post-tax contribution made from 1 July 2007.
legalsuper strongly recommends that you obtain advice from a financial adviser in relation to these proposed changes if you are either considering making large non-concessional contribution now or you have done so since 2007.
Non-concessional contributions are personal contributions that are not claimed as an income tax deduction. These also include contributions made by the member’s spouse to the member’s super account.
For the period 1 July 2016 - 30 June 2017, non-concessional contributions made to super are capped at $180,000 (or $540,000 over a three-year period).
In accordance with subsection 292-85(2) of the ITAA 1997, the non-concessional cap for an income year is a multiple of the concessional contributions cap.
People under 65 years old may be able to make non-concessional contributions of up to three times their non-concessional contributions cap over a three-year period. This is known as the 'bring-forward' option.
The bring-forward cap is three times the non-concessional contributions cap of the first year. If you brought forward your contributions in 2016-17, it would be 3 x $180,000 = $540,000
A tax of 49% is levied on the member for non-concessional contributions over the cap. The member is personally liable for this tax and must ask their super fund to release an amount of money equal to the tax.
Non-concessional contributions are sometimes known as ‘after-tax’ contributions. These contributions include:
- personal contributions that you aren’t allowed an income tax deduction for (this includes personal contributions made to defined benefit funds and untaxed (constitutionally protected) funds)
- contributions your spouse (including a same-sex spouse) makes to your super fund unless your spouse makes contributions because they’re your employer
- contributions in excess of your concessional contributions cap (that is, your excess concessional contributions)
- contributions in excess of your lifetime super capital gains tax (CGT) cap amount
- amounts transferred from foreign super funds, excluding amounts included in the fund's assessable income
- any contributions made from 10 May 2006 that have not previously been counted as non-concessional contributions if the fund changes from being a non-complying fund to a complying fund
- contributions made for you if you are less than 18 years other than contributions made by your employer.
Non-concessional contributions do not include:
- the super co-contribution
- contributions arising from certain structured settlements or orders for personal injuries that result in permanent incapacity
- contributions up to a lifetime limit of $1 million (indexed) arising from the disposal of qualifying small business assets under the CGT small business exemptions
- contributions made to a constitutionally protected fund that would have been assessable income of the fund if the fund was a taxable super fund (for example, employer contributions made to an accumulation fund that is constitutionally protected)
- contributions to a public sector super scheme that are not included in the fund's assessable income because of a choice made by the scheme’s trustee (sometimes called last minute contributions)
- a rollover or transfer of a super benefit between complying funds, and
- the tax-free component of a directed termination payment
If you have any questions please contact legalsuper on 1800 060 312.