Retirement planning toolkit
Superannuation contribution rules
Making extra contributions to your super fund can be an effective way to boost your payout at retirement. But you need to beware of the tax implications.
Concessional (before-tax) contributions
Concessional contributions are made into your super fund for your benefit, for which someone has claimed a tax deduction. They include:
- Compulsory super guarantee contributions made by your employer or,
- Salary sacrifice contributions or,
- Personal contributions, if you notify your fund that you intend to claim an income tax deduction for them.
Concessional contributions are taxed at 15%, which is paid by your super fund.
Non-concessional (after-tax) contributions
Non-concessional contributions are generally the after-tax contributions paid by you to your super fund. They include personal contributions you make from your after-tax pay. Since you have paid tax on these contributions already, they're not taxed in the super fund.
Mind the cap
A contributions cap sets a limit on the amount of contributions you can make in any one year before you pay extra tax.
For most people, this concessional contributions cap is $25,000 per annum. But if you’re over 50, the cap is $50,000 per annum until 30 June, 2012. If you exceed the concessional contributions cap, you're liable for a tax of 31.5% on the excess.
The non-concessional contributions cap is $150,000. However, if you’re under 65, there's a "bring forward rule". This allows you to contribute up to 3 years’ worth of non-concessional contributions (i.e. $450,000). But you won’t be able to contribute any more in the next 2 years.
If you exceed your non-concessional contributions cap, a tax of 46.5% applies to the excess.
Need more information?
Super contributions are a complex topic. For more detailed information, you could see the ATO website or talk to your accountant or a Westpac Financial Planner.
Westpac Financial Planners will give you advice that’s easy to understand about a complex but important area of your life.
Start a conversation
Call us today on 1300 661 577 if you’re concerned about the amount of super you'll have at retirement.
