Australia has had limits on superannuation contributions since 1 July 2007. These fall into two broad categories: concessional and non-concessional.
Concessional contributions are before-tax contributions that form part of the fund’s assessable income. Examples include super guarantee (SG) contributions, salary sacrifice contributions, personal contributions which are claimed as a tax deduction, contributions made by another person (excluding spouse or child contributions), certain amounts allocated from a fund’s reserves and super guarantee shortfall payments.
Non-concessional contributions are after-tax contributions that do not form part of the fund’s assessable income. Examples include personal contributions which are not claimed as a tax deduction, spouse contributions, child contributions, certain overseas pension transfers, small business sale proceeds that are contributed to super and excess concessional contributions.
The caps for the year to 30 June 2017 are summarised below.
|Superannuation Contribution Limits|
|50 to under 60||$25,000|
|60 to under 65||$25,000|
|65 to under 75 and meet work test*||$25,000|
|Under 65||$100,000 or $300,000 using 3-year 'bring forward' rule|
|65 to 75 and meet work test*||$100,000|
|* Member must be gainfully employed for a minimum of 40 hours in a consecutive 30-day period prior to the contribution being made.|
Some important tips
The test for determining whether your concessional contribution cap is $30,000 or $35,000 is your age as at 30 June 2016. If you were aged 49 or over, you are entitled to the higher contribution limit of $35,000.
Another important point to note concerns super contributions by those approaching age 75. Assuming you satisfy the work test, the general rule is that you can make contributions up until 28 days after the end of the month that you turn 75. For example, if you turn 75 on 17 May 2017, you can make contributions up until 28 June 2017. The contribution must be made and received by the fund by this date.
However this restriction does not apply to super guarantee and award-mandated contributions for those aged over 75. Other employer contributions – e.g. those via salary sacrifice arrangements and contributions by self-employed workers – cannot be accepted.
|Under 65||65 - 69||70-74||75 and over|
|Mandated SG or award contributions||Accepted without restriction||Accepted without restriction||Accepted without restriction||Accepted without restriction|
|Additional employer contributions, including salary sacrifice and self-employed contributions||Accepted without restriction||Accepted if member satisfies work test||Accepted if member satisfies work test||Cannot be accepted|
|Voluntary personal (after-tax) contributions||Accepted without restriction||Accepted if member satisfies work test||Accepted if member satisfies work test||Cannot be accepted|
|Spouse contributions||Accepted without restriction||Accepted if spouse satisfies work test||Cannot be accepted||Cannot be accepted|
Proposed Budget changes
- The 2016-17 Federal Budget proposed a lifetime non-concessional contributions cap of $500,000 effective from 7:30 pm Budget night on 3 May 2016. If legislated, this will replace the existing non-concessional cap of $180,000/$540,000.
- The current work test that applies for people making contributions between age 65 and 74 is set to be removed effective 1 July 2017. This change will also allow individuals to make contributions for a spouse aged under 75 without requiring the spouse to satisfy a work test.
- The concessional contributions cap is expected to be cut to $25,000 for all age brackets from 1 July 2017.
For more information on this and other superannuation matters, please contact us.