Super Contributions – Are You Paying Enough or Too Much?

A plant growing on top of a pile of coins symbolises financial growth with the aid of a tax accountant in Sydney.

With the new financial year well underway and the 1st quarter super contributions due for payment by 28 October 2015, are you maximising your superannuation cap limits or contributing too much for your staff? Consider consulting professional accountants in Sydney to optimise your superannuation strategies.

Contribution caps

As super contributions have annual limits, care must be taken to ensure these caps are not exceeded, and penalty taxes are imposed.

 Concessional Cap
(before tax contributions)
Non-Concessional Cap|
(after-tax contributions)
2015/16 financial year:
< 50 years old as of 30 June 2015
2015/16 financial year:
≥ 50 years old as of 30 June 2015
Excess Contributions Tax on amounts over the capExcess amount over your cap will be added to your assessable income and taxed at your marginal tax rate49% for amounts over $180,000. Contributions over $180,000 may be withdrawn along with any associated earnings. The earnings would then be taxed at your marginal tax rate

 Tips & traps

  • “Bring Forward” provisions
    You can bring forward the next 2 years of non-concessional contributions into this year to a maximum of $540,000.
  • Superannuation guarantee & salary sacrifice contributions
    Concessional contributions include any contributions made by your employer, such as the 9.5% superannuation guarantee contributions and salary sacrifice contributions.
  • Superannuation outside my SMSF
    It is the total of your concessional contributions made to all superannuation funds, which is counted against your concessional contribution cap.
  • Work test and contributions for persons aged 65 to 74* years of age
    If you are aged 65 or more at the time of the contribution, the work test must be met before contributing. The work test requires a member to be gainfully employed for at least 40 hours in 30 consecutive days in the financial year. (*Contributions may be accepted up to 28 days after the month when the member turns 75.)
  • Triggering the “bring forward” provisions before 1 July 2014
    If you triggered the “bring forward” provisions on or before 30 June 2014, your total non-concessional contributions cap remains at $450,000 (not $540,000).
  • Turning age 65 in the year of triggering “bring forward” provisions
    Suppose you are aged 64 or under on 1 July 2015. In that case, you can take advantage of the “bring forward”’ provisions this year and contribute up to $540,000 (before turning 65), assuming you have not previously triggered a “bring forward” that covers this financial year.

Salary sacrifice agreements

When your salary is paid as extra super contributions, this is known as salary sacrifice. Some choose this because their assessable income is reduced and less tax is paid. For a salary sacrifice agreement to be effective, it must be entered into before the employee has earned the monies (i.e. it must be made prospectively).

Bonus payments paid into super

Suppose you’d like your performance bonus paid into your super fund (as opposed to paying you as a salary). In that case, the arrangement must be made with your employer before you meet the conditions of receiving the bonus. Similarly, any Christmas bonus can also be paid into super, provided this is agreed upon before deciding to pay the bonus.

If you have any queries about this information, please don’t hesitate to contact us.

*Correct as of September 2015

Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.

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