HQB’s Weekly SMSF News – Week 11

Contribution caps – what are the limits on how much I can contribute to superannuation?

• There are two broad types of superannuation contributions:
  1. Concessional
     • Also known as before-tax contributions.
     • A tax benefit can usually be obtained by making concessional contributions.
     • The most common include
       • employer contributions (including compulsory and salary sacrifice) and
       • personal contributions you have claimed a tax deduction for (note: a “work test” needs to be met to claim a tax deduction if you are 67 or older)
     • The current cap is $27,500 per year
     • Under certain conditions, it may be possible to carry forward up to five previous years of “unused” concessional contributions caps to include in your current year’s cap
     • Your SMSF will pay tax of 15% on these types of contributions. In the case of high-income earners (>$250,000) there is an additional 15% Division 293 tax which can be paid from super or personally.
  2. Non-concessional
     • Also known as after-tax contributions.
     • No direct tax benefit is gained and the SMSF pays no tax on these types of contributions.
     • The most common are personal contributions which you have not claimed a tax deduction for.
     • The current cap is $110,000 per year
     • Under certain conditions, it may be possible to bring-forward two future year’s caps, allowing up to three years in one.
• Contributions count towards the annual cap in the year the SMSF receives the contribution, which is generally when it hits the SMSF’s bank account. For this reason, it’s important that any contributions made in June are made well before the end of the month.
• There are also age requirements that dictate what types of contributions can be made. For example, under 60-year-olds can make most types of contributions with the only restrictions being the caps. Whereas if you are 75 years or older, the only contributions that can be accepted are compulsory employer contributions and downsizer contributions.

This is an ever-changing area of super fund law, especially the cap amounts, so please do contact our office for the latest up to date advice in this area before taking any action.

– Brad Sheaves

Posted 01.11.2022

This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.