Contributions caps - there's a limit
The Australian taxation and superannuation systems are set up to provide some excellent tax benefits and concessions to those income-earners who contribute to their own super while they’re working. But, while there is no limit to how much you’re allowed to add to your super, there is a limit on the tax concessions you can claim.
In short, if you contribute too much you may have to pay extra tax. These superannuation contribution limits are known as contributions caps.
How do super contributions caps work?
The cap amount and how much extra tax you have to pay depends on your age and whether the contributions you make are:
- Before-tax (concessional) contributions, such as:
- Salary sacrificing
- Employer contributions
- Contributions where you’ve claimed a tax deduction
- Before-tax spouse/partner contributions
- After-tax (non-concessional) contributions, such as:
- Personal contributions with no tax deduction claimed
- After-tax spouse/partner contributions
What is my superannuation cap?
Before-tax (concessional) contributions
|Under 50 years of age||$30,000 per year||If you earn less than $37,001 per year, this tax is refunded back into your super account by the Tax Office (but note the government plans to delete this program from 2017). You qualify for the higher cap if you turn 50 any time during this financial year. If your total before-tax super contribution exceeds the cap, then you pay more tax on your super payments above this cap.|
|50 years of age and above||$35,000 per year|
If you split your before-tax contributions and give some to your spouse, these contributions count towards your cap.
After-tax (non-concessional) voluntary contributions
|$180,000 per year||If your total after-tax super contribution exceeds this, then you are liable to pay more tax on your super payments above this cap.|
Bringing forward – averaging out your contributions
If you’re under 65 years of age, you may be able to spread your after-tax contribution cap over three years. This ‘bring-forward’ option lets you average out your contributions, so if your average annual voluntary contribution over three years is less than $180,000, you may be able to avoid paying super contributions tax.
Chat to your super fund to see if you’re eligible.