Maximise your super contributions before 30 June 2019
Contributions Caps are limits on the super contributions you can make to your super fund each year. There are 2 types of contributions: concessional (before-tax) and non-concessional (after tax).
The contributions caps for the 2019 year are:
Concessional Contributions $25,000 and Non-Concessional Contributions $100,000.
Concessional Contributions are any contributions that have been made into your super fund before tax, they include any employer contributions, and any amounts you have voluntarily salary sacrificed from your wages into super. It is also now possible for you to make an after-tax contribution into your super fund and claim any portion of this as a tax deduction in your personal tax return. Any amount you claim as a tax deduction is also counted towards your concessional contribution cap. Any contributions received by your super fund between 1 July 2018 and 30 June 2019 will count towards your 2019 contribution caps.
For Example: An employee on a salary of $90,000 would generally have compulsory employer contributions of $8,550 being made into their super fund. If they were to make a personal contribution of $15,000 into their super fund from their personal bank account, they could decide at the time of preparing their return if they would like to claim a tax deduction for this contribution. If they claim the whole $15,000 as a deduction in their personal tax return they would save around $4,875.00 in personal tax. This would then bring their total concessional contributions for the year to $23,550.
The super fund would then have to pay tax on the contribution of $2,250. However, as the tax rate in the super fund is only 15% , which is lower than their personal marginal tax rate, they would save around $2,625 in total.
If you are aged 65 or older you must pass a work test before you are able to make any contributions to super. The contribution caps are not guidelines, if you go over the caps the ATO will impose an excess contributions charge and you will not receive any tax benefit for the excess contribution. You must inform you super fund and receive an acknowledgement in writing before you are able to claim any super contribution as a tax deduction.
The above is a simplified example, the superannuation rules can be very complicated, so we encourage you, if you have any questions, or would like further information to contact us before making any decisions on 07 5536 2288.