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.

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