Super Focus- keep track of your contributions cap
Super can be a tax-effective way to save for retirement. However, exceeding super contribution limits may result in paying extra tax. For this reason, it pays to be aware of your super contribution caps and to know where to get help if you need it.
Concessional contribution caps
Concessional (before-tax) contributions include employer contributions (notional amounts apply for DBD members) and salary sacrifice contributions. The concessional contributions cap for members in accumulation funds is $25,000 and contributions up to this amount are generally taxed at 15%.
Any contribution exceeding the cap is taxed at your marginal tax rate and an interest charge is levied by the Australian Tax Office.
Prior to 1 July 2017, the concessional contributions cap was $30,000 for individuals less than 49 years of age on 30 June 2016 and $35,000 for those aged 49 and over. With the cap now $25,000 for a full financial year, some individuals will now exceed the concessional cap, even if their concessional contributions have not increased from last year.
Members with contributions in an accumulation fund, such as UniSuper’s Accumulation 1 and 2 divisions, have options to request an excess concessional contribution refund. If a member exceeds the concessional cap then the ATO will send a notice of assessment to the member advising how much the member exceeded the cap by. The excess concessional contributions are taxed at the member’s marginal tax rate, less a 15% tax offset, plus an interest charge. The ATO will give the member the option to pay the tax and interest from their bank account or release the excess contributions from their accumulation account. If the member opts to release the excess from super then they usually do so through their mygov account. The ATO will then request UniSuper release any concessional contributions above the cap and this money will be sent directly to the ATO. The ATO will then deduct any tax and interest payable and send the remainder to the member.
Take control of your contributions
Here are three tips to help you stay in control of your contribution limits:
If you’re a UniSuper member, you can make an appointment to see your on-campus consultant or call UniSuper Advice on 1800 823 842. If you are a UniSuper member and have any questions about your super, you can also contact UniSuper’s Member Services team on 1800 331 685.
This information has been prepared by UniSuper Management Pty Ltd and is of a general nature only and does not take into account your personal objectives, financial situation or needs. © 2018 UniSuper Management Pty Ltd. ABN 91 006 961 799 Australian Financial Services Licence No 235907. UniSuper Limited (ABN 54 006 027 121 AFSL No.492806) is the trustee of UniSuper (ABN 91 385 943 850)