Contributions to an SMSF can either be concessional or non-concessional:
- Concessional contributions (before-tax contributions, taxed at the concessional rate of 15%); and
- Non-concessional contributions (after-tax funds added to the SMSF, the SMSF will not get taxed on this again).
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:
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 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.
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.
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