As you may or may not be aware superannuation concessional contribution caps are changing from 1 July 2017, it is necessary to know what the changes are. Just in case you want to get in before the changes eventuate – it will be necessary to know what you can do now (before 30 June 2017), if you would like to top up before the deadline. So as a reminder, here is the recap.
Concessional (pre tax) contributions include:
1. employer contributions;
2. any amount you salary sacrifice;
3. personal contributions you claim as a personal super contribution deduction.
As these contributions are paid before tax is applied, then your super fund pays 15% tax on the contributions when it is paid to them.
As can be seen from the above table, there are caps to the amount of concessional contributions that can be contributed in your chosen superannuation fund.
From 1 July 2017 the concessional contribution cap will be $25,000 for everyone regardless of age.
If you wish to make extra concessional contributions, it is important to make sure that when you add up all your employer contributions and salary sacrificed amounts, you do not exceed $25,000 in concessional contributions during the year, irrespective of how many superannuation funds you contribute to.
Non-concessional (after-tax) contributions: personal contributions for which you do not claim an income tax deduction. If you have more than one superannuation fund – you need to add all contributions together which will count towards the non-concessional contributions cap.
From 1 July 2017 the annual non-concessional contribution cap will be reduced from $180,000 to $100,000 per year. This will remain available to individuals between 65 and 74 years old if they meet the work test. The cap will be indexed in line with the concessional contributions caps.
There are also changes to the bring-forward arrangements which I will discuss in the next blog. But if you have any questions in the meantime, feel free to contact us at Optima Partners.