Superannuation contributions in Australia 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 2020 are summarised below.
| Superannuation Contribution Limits 2020-21 | |
|---|---|
| Concessional | |
| Under 67 or under 75 and meet work test* or have work test exemption | $25,000 |
| Non-Concessional | |
| Under 67 | $100,000 or $300,000 using 'bring forward' rules |
| 67 to 75 and meet work test* or have work test exemption | $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. |
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Some important changes to the concessional contribution rules
One of the key changes that will effectively apply for this year is that fund members with a total superannuation balance below $500,000 can carry forward any unused concessional cap amounts that accrue from 1 July 2018 for up to five financial years into the future. It is important to note that this cap applies to the individual, not their superannuation account. So if a member has multiple superannuation accounts, it is the total contributions from all of them that will count against the contributions cap.
For those aged 65 and over, it is also important to understand the work test rules. 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 2020, you can make contributions up until 28 June 2020. 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.
| Contribution Type | Employee's Age |
|||
|---|---|---|---|---|
| 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 |
For more information on this and other superannuation matters, please contact us.