Website I Contact us I Send to a friend Excess Contributions
How much can you contribute?Leading up to 30 June, the most common question we are asked in regards to
superannuation is “how much can I contribute to super?”The answer to this question varies on a number of factors, the 2 key factors being
your age, and what you have already contributed to super.
The RulesContributions made to super count toward either concessional or non-concessional
contributions caps. Amounts contributed to super in excess of these caps are taxed
overall at the maximum tax rate of 46.5%.Concessional Contribution Cap for 2008-2009
Your concessional cap depends on how old you are on 30 June 2009. If you are
under 50 years of age, your cap is $50,000. If you are 50 or older, your cap is $100,000.Concessional contributions include:
- Employer contributions
- Salary sacrificed contributions; and
- Personal contributions that are allowed as a personal
superannuation deduction in your income tax return.Non-concessional contributions cap for 2008-2009
The non-concessional contributions cap is $150,000. However, if you were under 65
years of age on 1 July 2008, you may be able to spread or ‘bring forward’ your
entitlements so your cap is $450,000 over a 3 year period.Important Note - if you have triggered the bring forward rule in the 2008 financial
year, you may not be eligible to make any non-concessional contributions in the
2009 financial year. If you know you have triggered the ‘bring forward’ rule in the
2008 financial year, we recommend you contact our office prior to making any non-
concessional contributions to super.If you are unsure whether you have triggered the ‘bring forward’ rule in the 2008
financial year we recommend you contact our office, so we can work with you to
determine if you have or have not triggered the ‘bring forward’ rule.Non-concessional contributions include:
- After tax voluntary contributions; including spouse contributions.
- Personal contributions that aren’t allowed as a personal superannuation
deduction in your income tax return. (ie. you cannot create a loss by claiming a
personal super contribution in your income tax return. Therefore, if you have made a
contribution of $50,000 but only have taxable income of $40,000, the extra $10,000
will be required to be treated as non-concessional contributions).- Non-assessable transfers from foreign super funds, and
- Any excess concessional contributions.
Common Mistakes
In the 2008 financial year, we have found common mistakes which have resulted in
excess contributions tax to be as follows:
- Salary sacrifice arrangements in excess of the concessional contributions cap
- Life insurance policies, held through superannuation arrangement but not
necessarily your normal superannuation fund.- For SMSF client – expenses paid on the fund’s behalf which the fund has no
reimbursed the member’s for paying. (The ATO will deem these to be contributions)- Trying to maximize your concessional contributions, but not being eligible to claim
any or all of the contribution in your personal tax returnPenalties for Getting it Wrong
If you exceed a cap you (as an individual) will be liable for excess contributions tax. You’ll be taxed;
- 31.5% on any amount over the concessional contributions cap
- 46.5% on any amount over the non-concessional contributions cap
Keeping in mind that any excess concessional contributions are automatically
counted towards your non-concessional cap, you could potentially pay 78% in
excess contributions tax, on top of the 15% contributions tax paid by your
superannuation fund.In our experience the Tax Commissioner has been reluctant to exercise discretion in
relation to breaches of the contribution caps. We therefore, strongly recommend
seeking advice prior to making contributions.Information we need to provide you with accurate advice
This is only intended to be general advice and may not apply in all
circumstances. If you have any questions, please do not hesitate to contact
your normal contact partner at UHY Haines Norton:Bill Charlton
Rowan Wallace
Darren Laarhoven
John Knight
Michael Garrone
Dean VaneOr alternatively you can contact:
Megan Kelly our Superannuation Manager
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UHY Haines Norton Brisbane
Level 11, 42-60 Albert Street
GPO Box 2876 Brisbane Qld 4000
P: 07 3210 5500
F: 07 3229 6174
E: brisbane@uhyhn.com.au
www.uhyhnbrisbane.com.au
UHY Haines Norton Gold Coast
Level 9, 1 Corporate Court
Bundall QLD 4217
P: 07 5510 4836
E: goldcoast@uhyhn.com.au
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