Superannuation Contributions Planning and Monitoring

If you have not already done so, now is the time to start planning to maximise your annual concessional (tax deductible) and non-concessional (undeducted or after-tax) contributions to superannuation for the year ended 30 June, 2010.

For the year ended 30 June, 2010, the maximum ("capped") amount that can be contributed to superannuation for a person is summarised as follows:

Age                 Concessional                  Non-concessional                    
                          (Deductible)                         (Undeducted)                          Total
                                    $                                               $                                         $
Under 50              25,000                                   150,000                           175,000
50 to 64                50,000                                   150,000                           200,000
65 to 74                50,000                                   150,000                           200,000
Over 75                    Nil                                            Nil                                      Nil

 

Avoiding Excess Superannuation Contributions Tax

You should also be reviewing and monitoring superannuation contributions made by you, or made on your behalf, by your employer to ensure that you do not exceed your relevant contributions caps.

The penalty tax for exceeding one's contributions cap can be as high as 93% of the amount in excess of the cap. Furthermore the Australian Taxation Office will impose penalty tax for an excess contribution, even where the person has unknowingly or unintentionally exceeded their cap.

Finally, as noted in the bulletin, with the concessional contributions cap reducing from $50,000 to $25,000 for those under age 50 and from $100,000 to $50,000 for those aged 50-74,from 1 July 2009, the risk of exceeding one's concessional contributions cap is now much greater.