There have been significant changes to the annual caps for making super contributions from 1 July 2021. The rate for compulsory Super Guarantee (SG) contributions paid by your employer has also changed (rising from 9.5% to 10%).
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 2022 are summarised below.
| Superannuation Contribution Limits 2021-22 | |
|---|---|
| Concessional | |
| Under 67 or under 75 and meet work test* or have work test exemption | $27,500 |
| Non-Concessional | |
| Under 67 | $110,000 or $330,000 using 'bring forward' rules |
| 67 to 75 and meet work test* or have work test exemption | $110,000 |
* Member must be gainfully employed for a minimum of 40 hours in a consecutive 30-day period prior to the contribution being made. |
|
What is the best mix of super contributions for me?
To work out what mix of contributions might be right for you, there are a number of online calculators and guides.
One of the more useful ones is the ASIC Super Contributions Optimiser on the Australian Securities & Investment Commission’s (ASIC) MoneySmart website.
The calculator assumes your employer contributes 10% of your average ordinary times earnings (OTE) into your super account but if your employer contributes more than the required minimum, you can increase the percentage amount. It is also updated regularly to reflect current taxation rates.
If you are self-employed, you can reduce your employer contributions to 0% and enter your contributions as additional voluntary or personal contributions.
A few caveats
- The ASIC calculator does not give you the option to make ‘bring-forward’ non-concessional contributions from either of the following two financial years, if you are eligible.
- Likewise, the calculator does not work for members of defined benefit super funds, as these use specific formulas to work out the super benefits for members.
- The results from ASIC’s calculator are only apply to the current financial year. Therefore if you are planning your contributions mix for the next few years, it is important to redo the calculator on a regular basis.
- The calculator does not take into account your other financial circumstances such as your debts, expenses or long-term objectives. You should consider these factors before making any final decisions on the best mix of super contributions.
For more information on this and other superannuation matters, please contact us.