Clarifying super rules

In July 2009, the Government implemented changes to superannuation concession contributions. With hefty tax implications for excessive contributions above the new levels, it’s important to understand how much salary you can sacrifice.

From July 2009, the new limits on how much can be contributed to superannuation at a preferential tax rate are as follows:
§ $25 000 per annum (indexed) for those under 50 years of age, and
§ $50 000 per annum (not indexed), for contributions made before 30 June 2012 if they are at least 50 years of age at the end of a financial year.
This means that an individual under 50 can contribute up to $25,000, including statutory employer contributions, and have this amount taxed at 15per cent once it enters a superannuation fund. If you contribute more than $25,000, this amount will be taxed at an addition 31.5per cent so that the total amount of tax withheld on contributions is equal to 46.5 per cent – the highest marginal tax bracket plus Medicare levy. The same tax amounts will also be applied to contributions over $50,000 for those who qualify for this amount.

Keeping this in mind, it is worthwhile checking with your super fund the amount of contributions you are making and how they are being taxed. For more information on superannuation tax rates, visit the Australian Federal Government website.