Contributions

Contributions to an SMSF can either be concessional or non-concessional:

  1. Concessional contributions (before-tax contributions, taxed at the concessional rate of 15%); and
  2. Non-concessional contributions (after-tax funds added to the SMSF, the SMSF will not get taxed on this again).

Concessional contributions

The cap for a Member’s concessional contribution depends on their age as set out in the following table:

Income Year Age and applicable cap amount
2017-2018 All ages: $25,000
2016-2017 < 49 : $30,000 49 + : $35,000
2015-2016 < 49 : $30,000 49 + : $35,000
2014-2015 < 49 : $30,000 49 + : $35,000
2013-2014 < 59 : $25,000 59 + : $35,000

Concessional contributions made to an SMSF include:

Employer Contributions (more info - click to expand)

Employers are required to make a Superannuation Guarantee Contribution (SGC) of 9.5% of an employee’s gross salary and wages. Trustees have the choice of asking their employer to contribute directly into their SMSF . Trustees can fill out a superannuation standard choice form notifying their employers of their election to contribute directly into their SMSF. Generally, if you ask your HR department, they will usually transfer the contributions into the Fund you elect.

Salary Sacrifice

Salary sacrifice is an arrangement between an employer and an employee whereby the employee agrees to put more than 9.5% of their gross salary into their super fund. Doing so could result in tax saving if the Trustee’s marginal tax rate is higher than 15%. However, Trustees need to be mindful that after 1 July 2017, the concessional contribution cap  has been decreased to $25,000. For more information, please see here.

Self-employed contributions

After 1 July 2017, the requirement that a Trustee needs to derive less than 10% of their total income from a single employment source in order to claim a deduction for self-employed contributions has been abolished. Most people will be able to claim a full deduction for contributions they make to their super until they turn 75. After the age of 75, you can only claim deduction on the Superannuation Guarantee Contribution (SGC) of 9.5%. For more information, please see here.

From 1 July 2013, if a Member exceeds their concessional cap, the amount over the cap will be included in their assessable income and taxed at their marginal tax rate plus an excess concessional contributions (ECC) charge. The ECC charge is applied to concessional contributions in excess of the cap to recognise that the tax is collected later than normal income tax. The Tax Office will apply a 15% tax offset to account for the contributions tax that has already been paid by the super fund. This will be issued to the member on an income tax Notice of Assessment or income tax Notice of Amended Assessment.

Non-concessional contributions

The non-concessional contributions cap from 1 July 2017 have decreased to $100,000. Members aged 64 or younger can still bring forward their non-concessional contributions over three years.

More info here:

Super Contributions Cap

 

  • mark hobson

    I want to bulk up my SMSF with post tax contributions (non
    concessional contribution). How much can I top of after tax money per
    annum please?

    Also what happens to the 15% input tax. If I have
    $100,000 to pay in as no concessional contribution then do I have to pay $15K
    in tax as well at the end of the Financial Year for the SMSF tax return or at
    the time of crediting the SMSF fund please.

    • superannuationwarehouse

      Mark,

      The ATO has recently lifted up the non-concessional cap to $180k per year from 2014-15 year onward. You can also take the advantage of the bring forward rule to contribution $540K over a three-year period in the First Year. For more info on bring forward rules, please see:

      http://www.smsfwarehouse.com.au/contributions/bring-forward-rule/

      The SMSF does not need to pay any tax on the non-concessional
      contribution because it is after-tax money.

      Trust this answers your question.

  • Kumar Gopalan

    I am 63 and retired. I have an account based pension account with LG Super and draw down the minimum amount every year.
    My query: I sold my principal residence this month and the settlement is in Sep. From the proceeds I wish to make a non-concessionary contribution of $300,000 (i.e $100, 000 for every year which is the limit). Am i allowed to do this? I do not have an SMSF but an account based pension with LG Super. I am under 65.

    • Hein Preller

      Kumar,

      The Super Fund you are in seems to be a Government Fund. My understanding is
      the same non-concessional contribution rules will apply in your fund compared
      to the SMSF’s that we administer.

      On the basis you have not utilised your bring-forward caps in the last 3
      years, you can now use the bring-forward rules up to $300k as noted in your
      question. The good news is that you are still under 65 so you can make
      use of these provisions:
      https://www.smsfwarehouse.com.au/contributions/bring-forward-rule/

      Be mindful this contribution will be added to your accumulation account and you will
      have to start a pension if it is your intention to add this amount to a pension balance.The reason for this is that a contribution cant be added to a pension balance.

      Trust this gives you the guidance needed.

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Superannuation Warehouse is an accounting firm and do not provide financial advice. All information provided has been prepared without taking into account any of the Trustees’ objectives, financial situation or needs. Because of that, Trustees are advised to consider their own circumstances before engaging our services.