CONCESSIONAL / DEDUCTIBLE CONTRIBUTIONS BY EMPLOYERS FOR EMPLOYEES
Maximum contributions for each employee up to 75 years of age, including “salary sacrifice” (needs to be proactive) and superannuation guarantee payments without incurring excess concessional contributions tax: $30,000*
From 1 July 2017 the concessional limit is $25,000 for all taxpayers.
Condition:
Over 65 years must satisfy the work test, over 70 years work test applies and only contributions received before the 28th day after the end of the month in which member turns 75 are deductible.
CONCESSIONAL / DEDUCTIBLE PERSONAL CONTRIBUTIONS BY INDIVIDUAL TAXPAYERS INCLUDING INVESTORS
Maximum contribution by each individual up to 75 years of age without incurring excess concessional contributions tax: $30,000*
From 1 July 2017 the concessional limit is $25,000 for all taxpayers.
Conditions:
- Less than 10% of assessable income including reportable employer superannuation contributions and reportable fringe benefit amounts are attributable to employment. This condition will be removed from 1 July 2017.
- The individual must notify the fund of intention to claim a deduction (form NAT 71121) and the fund must acknowledge the notice.
- Contribution cannot create or increase a loss (deduction cannot exceed taxable income).
- Over 65 years must satisfy work test.
- Only contributions received before the 28th day after the end of the month in which member turns 75 are deductible.
*TRANSITIONAL CONCESSIONAL / DEDUCTIBLE EMPLOYER & PERSONAL CONTRIBUTIONS
The concessional limit in 2016/2017 is $35,000, for persons 49 years or over on 30/06/2016.
HIGH INCOME EARNER CONTRIBUTIONS (DIVISION 293)
An additional 15% “contributions tax” is applied to those with adjusted taxable incomes (broad definition) exceeding $300,000. This threshold will be reduced to $250,000 from 1 July 2017.
NON-CONCESSIONAL / NON-DEDUCTIBLE CONTRIBUTIONS BY INDIVIDUAL TAXPAYERS
Maximum contribution by each individual up to 75 years of age without incurring excess non-concessional contributions tax: $180,000
From 1 July 2017 the non-concessional limit is $100,000 subject to the individual’s total superannuation balance.*
Note: Over 65 years the work test will need to be satisfied.
Note: An individual taxpayer who is under 65 years of age in an income year can bring forward two years’ entitlements and make one contribution of $540,000, subject to the $1.6m transfer balance cap (as at 1 July 2017), without exceeding the non-concessional contributions cap ─ i.e. no further contributions over the three years.
Note: The annual maximum amount will be indexed in line with the concessional amount.
TRANSFER BALANCE CAP
A transfer balance cap of $1,600,000 will apply from 1 July 2017 which will be indexed in $100,000 increments. Amounts above the cap cannot be transferred from accumulation to retirement, or pension, phase. Excess amounts must be withdrawn or transferred to accumulation phase. Excess transfer balance tax will be calculated on the excess amount until it is withdrawn from retirement phase.
From 1 July 2017 non-concessional contributions can only be accepted by the super fund if the total super balance is less than $1,600,000.
EXCESS CONCESSIONAL / DEDUCTIBLE AND NON-CONCESSIONAL / NON-DEDUCTIBLE CONTRIBUTIONS
An excess contributions tax of 31.5% and 46.5% was previously payable in respect of concessional and non-concessional contributions which exceeded the maximum amount allowed; however, from 1 July 2013 excess concessional (only) contributions will be taxed at the member’s marginal tax rate and an interest charge applied. The excess may be withdrawn from the fund.
The punitive taxes remain for excess non-concessional contributions. The tax rate for excess non-concessional contributions increased from 1 July 2014 to 47%.
GOVERNMENT CO-CONTRIBUTIONS
The co-contribution made by the Government of up to $500 is available to employees and the self-employed less than 71 years of age at the end of the income year who make non-concessional/undeducted personal superannuation contributions of up to $1,000 and whose total income (assessable, reportable employer superannuation contributions and reportable fringe benefit amounts) is less than $51,021; the lower threshold of $36,021 allows for the full co-contribution 50c/$1.
Conditions:
- 10% or more of the person’s total income is attributable to employment or carrying on of a business.
- Salary sacrifice superannuation contributions are included in assessable income from 1 July 2009.
- From 1 July 2017 the individual must have a balance of less than $1.6 million in total on 30 June of the previous year and must not have exceeded the non-concessional limit for that relevant year.
GOVERNMENT CONTRIBUTIONS FOR LOW INCOME EARNERS
From 1 July 2012, concessional contributions made by or on behalf of individuals with adjusted taxable incomes of up to $37,000 will be matched by the Government up to an annual maximum amount payable of $500. This offset will be replaced by the Low Income Super Tax Offset (LISTO) which will operate in a similar manner from 1 July 2017.
CONTRIBUTIONS FOR SPOUSE – TAX OFFSET
A taxpayer making a personal non-concessional/non-deductible contribution for his/her non working or low income spouse is eligible for a tax offset of up to $540 where a contribution of up to $3,000 is made for a spouse whose assessable income, reportable fringe benefit and reportable superannuation contribution amounts do not exceed $10,800. The offset is phased out at $13,800.
From 1 July 2017 the offset spouse’s income threshold will be increased to $40,000.
Condition:
No work test is applied if the spouse is under age 65, but between 65 and 70 years the spouse must satisfy the work test. No offset for those over 70 years of age.
FUND ACCEPTANCE OF CONTRIBUTIONS – AGE AND WORK TEST
A regulated superannuation fund may accept contributions as follows:
- If the member is under 65 – all contributions made, except non-concessional contributions if the member’s total balance is $1,600,00 or more.
- If the member is 65 or more but under 70 – mandated employer contributions or employer or member contributions provided the work test is satisfied.
- If the member is 70 or more but under 75 – mandated employer contributions or employer or member contributions up to 28th of the month in which the member turns 75 and the member satisfies the work test.
- If the member is 75 or more – mandated employer contributions.
A person satisfies the work test if gainfully employed at least 40 hours in a period of not more than 30 consecutive days in that financial year.
SUPERANNUATION GUARANTEE CONTRIBUTION RATE
From 1 July 2014, the contribution rate increased from 9.25% to 9.5% and will remain so until 1 July 2021 when it will increase by 0.5% each year until the rate is 12%.
REPORTABLE EMPLOYER SUPER CONTRIBUTIONS (RESC)
From 1 July 2014, the payment of salary sacrifice superannuation and other additional* superannuation over and above the compulsory superannuation guarantee charge of 9.5%, paid by employers for employees, is to be recorded on employees’ year end PAYG summaries.
*where employee influences the rate or amount of employer contributions.
An employee is considered to have the capacity to influence if he or she can directly negotiate the rate or amount of employer contributions.
As a guideline, the capacity to influence may be shown by:
- The employer’s relationship with the employee – e.g. the employee is the employer’s spouse.
- The employee’s involvement in negotiations/preparation concerning the terms of any industrial agreement governing super contributions;
- The amount contributed for the employee relative to the compulsory contributions the employer is required to make;
- The employer’s super contribution arrangements for other employees; and
- Any non-arm’s length dealings.
SUPERSTREAM STANDARD FOR CONTRIBUTIONS – AN EMPLOYER’S PERSPECTIVE
The SuperStream standard for contributions (SuperStream for short) is aimed at improving the efficiency of the superannuation system by requiring employers to submit data and make payments for super contributions on behalf of employees electronically. This will ensure employer contributions are paid into a member’s account in a consistent, timely and efficient manner.
The start date for implementing this standard has been pushed back for employers with fewer than 20 employees to 1 July 2016.
It has been suggested that the ATO will allow a 12 month period from the 1 July 2016 implementation date for employers to “get it right” with respect to the new payment and reporting standard. After this, the ATO will undertake compliance checks and may issue penalty notices or fines to employers who have failed to take reasonable steps or genuine attempts to meet their SuperStream obligations.
As every business is different, there is no ‘one size fits all’ approach to adopting SuperStream. The following options are available to assist employers meet their requirements:
- Upgrade their payroll software
- Use an outsourced payroll function or other service provider
- Use a commercial clearing house or the free Small Business Superannuation Clearing House (for employers with 19 or less employees)
To support contributions being made using the SuperStream standard, employers will need to collect the following information from their employees (if not already on hand):
- Unique superannuation identifier (USI) for APRA-regulated funds
- ABN for SMSF funds
- Bank account details
- Electronic service address
Most employers do not need to understand the technical detail of SuperStream as the data requirements will be sourced from a complying payroll system. However, your payroll officer/staff will need to become familiar with the data and processing requirements of SuperStream.
Please contact your advisor for more information about superannuation contributions.
