Superannuation - Concessional Contributions

From 1 July 2018 :

If otherwise eligible, you can make concessional contributions up to $25,000 a year and, provided that your total superannuation balance is less than $500,000 on 30 June of the previous financial year, if you contribute less in any year, the rest rolls forward to the next year for up to 5 years. The first year you will be entitled to carry forward unused amounts is the 2019/2020 tax year.

Concessional contributions include both personal contributions properly claimed and employer contributions including salary sacrifice.

From 1 July 2007 the concessional contribution limits below apply to the total contributions made on behalf of a person irrespective of whether they are made by multiple employers or unsupported persons.

Year	Under age 49#	Age 49 or more#
2024-2025	$30,000	$30,000
2023-2024	$27,500	$27,500
2022-2023	$27,500	$27,500
2021-2022	$27,500	$27,500
2020-2021	$25,000	$25,000
2019-2020	$25,000	$25,000
2018-2019	$25,000	$25,000
2017-2018	$25,000	$25,000
2016-2017	$30,000	$35,000
2015-2016	$30,000	$35,000
2014-2015	$30,000	$35,000

 

Year	Under age 35 #	Age 35 to 49 #	Age 50 to 74 #
2013-14	$25,000	$25,000 #	$25,000 #
2012-13	$25,000	$25,000	$25,000
2011-12	$25,000	$25,000	$50,000
2010-11	$25,000	$25,000	$50,000
2009-10	$25,000	$25,000	$50,000
2008-09	$50,000	$50,000	$100,000
2007-08	$50,000	$50,000	$100,000

Changes to age cut-offs

Up to 30 June 2013 the age cut-off was based on the age of the member on the last day (30 June) of the relevant financial year.

However from 1 July 2013 the cap increased to $35,000 for individuals aged 59 or more on 30 June of the previous financial year.

And from 1 July 2014 the cap increases to $35,000 for individuals aged 49 or more on 30 June of the previous financial year.

The work test applies to members between the ages of 65 and 74.  For more information about the work test, refer to our separate topic ‘Age and Work Test Restrictions’.

NB! By contrast non-concessional contribution limits are based on the age of the member on the first day (1 July) of the relevant financial year, but the usual Age and Work Test restrictions in SIS Reg 7.04 (1) still apply.  (See ‘Age and Work Test’ link below.)

For a more detailed discussion of this issue refer below to the links to ATO ID 2012/16 and the expert commentary by DBA Lawyers.

The ATO has addressed the timing issue of when a concessional contribution is made on behalf of a member in one financial year but is allocated in the following financial year for the purposes of the contribution caps.

ATO ID 2012/16 confirms that a contribution made in June is not necessarily counted as a concessional contribution in the financial year it is made. If it is only allocated to the members account in the following year then:

·         For cap threshold purposes it is only contributed in the year it is allocated.

·         But the deduction for the taxpayer is available in the year the contribution is made.  

·         In addition, the concessional contribution is subject to contributions tax in the year the payment is made.

·         The allocation of the contribution for member reporting purposes is reported in the following financial year.

This may be useful in solving excess contributions problems and in claiming double deductions.

Can a member ‘double dip’ on the concessional contribution limit?

Yes they can.  For Example: If the taxpayer could have contributed $25,000 concessional contributions during the year, then make an additional $25,000 in June, enabling a $50k tax deduction.  $25k is allocated to the member by the superfund in the current financial year, with the $25k in June taxed within the fund, but the allocation not occurring until the following financial year (must be before 28 July).

Key Issues:

> The trust deed must permit the above practice

> The sum of the concessional caps for both the current and following year are not exceeded.

> The contribution to be allocated must be made at a different time to the contribution to be unallocated and the unallocated contribution must be made in June and allocated within 28 days of month end.

> The unallocated amount is not a reserve and does not need to be dealt with separately in the investment strategy.

 

 

 

A taxpayer cannot use a personal super deduction to create or increase a loss.  Therefore the taxpayer cannot claim more than the amount of their taxable income in that year.  Only the amount of the personal contributions that you are allowed as a deduction in your income tax return will count towards your concessional contributions.  The remainder of your personal contributions will count towards your non-concessional contributions.  If your client has already maximised their non concessional contributions for the year, the remainder amount (referred to above) will create an excess non-concessional contribution. 

 

From 1 July 2007

Concessional contributions by eligible unsupported persons can be claimed in full up to the limits as set out in the post 1/7/2007 MDC/concessional tables above.  The limits in the table are the total concessional contributions allowed from all sources including unsupported persons and all employers.

The Rules since 1 July 2007

You are eligible to claim a deduction if:

>You meet the age-related conditions (note 1)

>You satisfy the ‘maximum earnings as an employee’ condition (note 2) – The 10% Rule

The 10% rule no longer applies from 1 July 2017

>You made personal contributions to a complying super fund or a retirement savings account (RSA)

>You made the contributions in order to obtain super benefits for yourself, or for your dependants in the event of your death

>You have written to your superfund or RSA provider in the approved form (NAT 71121) and advised them of the amount you intend to claim as a deduction, and

>Your superfund or RSA provider has acknowledged your notice of intent and agreed to the amount you intend to claim as a deduction.  (You can vary your notice of intent to claim a deduction, but only to reduce the amount, including to nil; however you can’t revoke or withdraw it)

Note 1: Age-Related Conditions

If you are under 18 at the end of the income year, you can only claim a deduction for your personal super contributions if you earned income as an employee or a business operator during that income year.            

For other ages, refer to the separate topic page Superannuation – Contributions – Age & Work Test Restrictions (See link below)

Note 2:  "Maximum earnings as an employee"

From 1 July 2009 the following applies:

If you undertake some work as an employee during the year,  the total of your assessable income, reportable fringe benefits and reportable employer super contributions that are attributable to employment must be less than 10% of the total of these amounts during the year from all sources. (The 10% rule no longer applies from 1 July 2017)

From 1 July 2007 to 30 June 2009 the following applies:

The total of the assessable income and reportable fringe benefits that you earn as an employee (excluding employer compulsory and salary sacrifice super contributions) must be less than 10% of your combined assessable income and reportable fringe benefits for that income year from all sources.  This is the case regardless of whether your employer has paid super on your behalf.

 

Assessable income is defined as ‘income under ordinary concepts plus statutory income’ minus ‘exemptions’.

 

It is used in calculations such as:

 

> the concessional superannuation contribution 10% rule

 

> the spouse contribution offset, and

 

> the government superannuation co-contribution   

 

Assessable income typically includes:

 

> gross salary and wages, gross business income, grossed up dividends, gross interest income, gross rent received and gross personal services income.  Gross means before any expense deductions.

 

> net capital gains earned personally (net capital gains is after deducting the discount)

 

> gross trust distributions, except for the distributed capital gains component. Only the net capital gains after deducting the discount are included in the beneficiary’s assessable income.

 

Prior to 1 July 2010 the assessable income of a beneficiary included gross capital gains distributed from a trust.

 

NB! As a result of the trust streaming legislation introduced on 23 June 2011, (effective from 1 July 2010) capital gains distributed from trusts are no longer grossed up for inclusion in the assessable income of the beneficiary (only net capital gains are included)

 

> certain primary production income, pensions less the deductible amount, assessable foreign income, the assessable part of an ETP from an employer but not from a superfund.

 

> net partnership income from each partnership.  Losses from any partnership cannot be offset against any other income and that includes profits from another partnership.  Net capital gains and foreign income from a loss partnership are not included in assessable income to the extent that the partnership loss is greater than them.

 

 

Maximum Deductible Contributions (MDC) up to 30/6/2007

 

The Aged Based Deduction limits below are per Unrelated Employer/Eligible Person.

 

Year	Under age 35	Age 35 to 49	Age 50 to 70
2006-07	$15,260	$42,385	$105,113
2005-06	$14,603	$40,560	$100,587
2004-05	$13,934	$38,702	$95,980
2003-04	$13,233	$36,754	$91,149
2002-03	$12,651	$35,138	$87,141
2001-02	$11,912	$33,087	$82,054
2000-01	$11,388	$31,631	$78,445
1999-00	$10,929	$30,356	$75,283
1998-99	$10,600	$29,443	$73,019
1997-98	$10,232	$28,420	$70,482
1996-97	$9,782	$27,170	$67,382
1995-96	$9,405	$26,125	$64,790
1994-95	$9,000	$25,000	$62,000

 

The applicable age is the age you were on the day when you made your contribution into the fund.  If you made more than one contribution during the year of income, the applicable age is your age on the day of your last contribution.

 

 

Up to 30 June 2007

In general, you cannot claim a tax deduction for personal contributions you make to a complying superannuation fund or RSA:

> if you are entitled to a government co-contribution;

> if you are under 18 at 30 June and have not derived income from eligible employment or business income in the year in which you are making the claim;

> to the extent that the amount of your contribution exceeds your taxable income or the age based limits;

> if you are over age 65 and do not meet the work test;

> if you reached 70 years of age during the year, you can claim a deduction only in relation to contributions you made on or before the 28^th day of the month following your 70^th birthday.

> unless you are an eligible person for the purposes of sub-section 82AAS (2) and you have a written sub-section 82AAT acknowledgement from your superfund.

In general this means that you are either:

> self-employed or substantially self-employed (Refer to the 10% rule below).

Or

> do not receive (and are not entitled to) superannuation support from your employer (unsupported persons).

Age-Based Limits

The maximum deduction is the lesser of:

> $5,000 plus 75% of contributions over $5,000.

> the aged based limits (MDC) below. 

Year	Under age 35	Age 35 to 49	Age 50 to 70
2006-07	$18,680	$54,847	$138,484
2005-06	$17,804	$52,414	$132,450
2004-05	$16,912	$49,936	$126,306
2003-04	$15,977	$47,338	$119,865
2002-03	$15,201	$45,184	$114,521
2001-02	$14,883	$43,116	$108,406
2000-01	$14,184	$41,175	$103,593
1999-00	$13,572	$39,475	$99,378
1998-99	$13,134	$38,258	$96359
1997-98	$12,643	$36,894	$92,976
1996-97	$12,043	$35,227	$88,843
1995-96	$11,540	$33,834	$85,387
1994-95	$11,000	$32,334	$81,667

The applicable age is the age you were on the day when you made your contribution into the fund.  If you made more than one contribution during the year of income, the applicable age is your age on the day of your last contribution.

Up to 30 June 2007

If the total of a person’s ‘assessable income, exempt income and reportable fringe benefits attributable to eligible employment’ is less than 10% of the total of the person’s assessable income and reportable fringe benefits, then the person is an eligible person for purposes of subsection 82AAS(2).