Super Frequently Asked Questions
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There is a limit to the amount of money you can voluntarily contribute into your super fund on a concessional basis. Superannuation contribution limits operate to limit the tax benefits available each year.
Making contributions over the limits results in additional tax payable, and excess concessional contributions are counted towards the non-concessional cap.
Concessional contributions are essentially those contributions which are tax deductible, and include employer contributions and personal contributions claimed by the self-employed.
The current concessional contributions cap, regardless of age is $25,000 per annum.
If you are older than 65 you will need to meet a work test to contribute to super in most cases. You need to work for at least 40 hours during 30 consecutive days at any time during this financial year to make tax deductible and non-deductible contributions to super.
Non-concessional contributions are those made from after-tax income. There is no contributions tax applied when they are contributed to the super fund.Once in the fund, the normal fund tax rates apply to earnings
The non-concessional contributions cap is $100,000. It then follows that $300,000 can be contributed over the three-year fixed period under the 'bring forward rule'.
If you have a total superannuation balance of close to $1.6 million, you are only able to access the bring forward rule for the number of years that would bring your balance to $1.6 million. Once you trigger the bring forward rule and your balance reaches $1.6 million you can’t make any further non concessional contributions even if you still effectively have not fully used up the remaining of the bring forward cap triggered.
If you triggered the bring forward rule before 2016/17 but the full $540,000 was not contributed, you will be limited to a transitional bring forward cap.
If you are over the age of 65 you cannot utilise the ‘bring forward’ rule, even if you meet the work test.
Amounts paid into superannuation by your employer to meet the Superannuation Guarantee obligations and amounts paid under a salary sacrifice arrangement are called concessional contributions.
Salary sacrificing into super involves asking your employer to redirect a portion of your pre-tax pay into your super fund. These contributions are taxed at a rate of 15% in the super fund. For most, this is a lower rate of tax than their marginal tax rate.
The concessional contributions cap per annum, per individual, is $25,000. If the total of your employer super guarantee contributions and salary sacrifice contributions go over this cap, you may have to pay extra tax.
Check your employment agreement or speak with your employer before arranging salary sacrifice into super. Employers are entitled to calculate your super guarantee contributions on your reduced salary, after salary sacrifice. You don’t want your super guarantee contributions to drop so get it in writing that your employer will still pay contributions on your gross income.
If you have salary sacrificed into super, the amount contributed is included in the reportable employer superannuation contributions amount shown on your PAYG payment summary. Also included are any superannuation contributions for which a tax deduction has been claimed. This means that any entitlement you have to any benefits from Centrelink or the Family Assistance Office that are subject to an income test will take into account those amounts.
It also contributes to the calculation of any Child Support payments and is used to determine your liability to such things as the Medicare levy surcharge or repayments of HECS-HELP debts. They may also impact on any tax offsets that you are entitled to claim on your tax return.
People who have reached 60 no longer pay tax on superannuation income streams (pensions or annuities) that are paid from a taxed fund. A taxed fund is one where contributions tax was paid on the contributions made by your employer into your super fund on your behalf.
Contributions tax would also have been paid for contributions made under a salary sacrifice arrangement. Most funds are taxed funds. However, for taxpayers who belonged to an untaxed super fund, they will still have to pay tax on their superannuation income stream, irrespective of their age.
Taxpayers who are over 60 years of age (for the full financial year) and receiving a superannuation income stream from a taxed fund no longer receive a PAYG Payment summary.
Even if your employer is required to contribute to your super, you are now also eligible to contribute and claim a tax deduction.
Prior to 1 July 2017 you needed to be self employed to be able to claim a tax deduction for personal contributions.
Contributions that you claim as a tax deduction count towards the $25,000 concessional contributions cap, along with any contributions your employer pays. If this cap is breached, you may have to pay excess tax.
If you claim a tax deduction for a contribution you have made, you are not eligible for the super co-contribution for the amount you claim.
You must make a valid ‘notice of intent to claim’ in the approved form (https://www.ato.gov.au/uploadedFiles/Content/SPR/downloads/n71121-11-2014_js33406_w.pdf ) to your super fund before you lodge your tax return or by the following June 30, whatever is earliest.
You must receive an acknowledgement from your super fund that a valid notice of intent has been received, BEFORE you claim the tax deduction.
If you make a personal contribution to super, you don’t have to claim a tax deduction. It will be treated as a non-concessional contribution and won’t be taxed in the fund. You may be eligible for a co-contribution for amounts not claimed as a tax deduction.
If you do not tell your superannuation fund what your TFN is then the fund will be required to pay additional tax on any contributions made by your employer (including salary sacrifice amounts).
Without having your TFN recorded, your fund will not be able to accept any personal contributions that you make and the government co-contribution that you may be entitled to cannot be paid into your account.
At H&R Block nothing is too complicated. We can assist you with any number of tax questions. Find an office near you and book an appointment online or call 13 23 25.