Getting caught out paying too much into super can result in a hefty and unexpected tax bill at the end of the financial year. With all the changes to legislation which are being rolled out, it can be difficult to know if you’re paying too much, so here’s a simple guide.
Concessional contribution limits
Individuals can contribute up to $25,000 of concessional super contributions (where a special tax rate is applied) in the financial year 2012/13. This includes super contribution guarantee paid by an employer and any amounts which you salary sacrifice. From 1 July 2012, the additional concessional contributions which enabled those over 50 to pay up to $50,000 per annum have been removed. $25,000 is the limit which applies to all.
Find out more about concessional contribution limits from ATO.gov.au
Non-concessional contribution limits
Contributions to which no tax deduction is claimed, i.e. paid from after-tax salary, also have a limit. For the financial year 2012/13, this limit is $150,000. If you are under 65, you are able to ‘bring-forward’ your non-concessional contributions by three years. For example, should you come into a lump sum this year, you could pay up to $450,000 in this financial year, but nothing for the next two.
Find out more about non-concessional contribution limits from ATO.gov.au
In order to help Australians increase their super balance, the Federal Government will match 50 per cent of contributions made by an individual up to $500. Income limits apply and if you earn less than $31,920 you may be eligible to receive the full contribution amount. For every dollar you earn over this amount, up to $46,920 the co-contribution is reduced by 3.333 cents. These figures are for financial year 2012/13.
Find out more about super co-contribution limits from ATO.gov.au
Low income super contribution
In the 2012/13 tax year, the Federal Government will make a super contribution tax payment of up to $500 annually for low income earners The payment amount will be 15 per cent of concessional contributions (including employer contributions) made by or for individuals with an adjusted taxable income which does not exceed $37,000.
Find out more about the low income super contribution from ATO.gov.au