Increase in the Superannuation Contributions Cap
A concessional contribution is a contribution made into your super fund before tax. These contributions into your super fund are taxed at a flat rate of 15%.
What is the cap on these contributions and how is it changing?
Between the 1st of July 2017 and the 30th of June 2021, the concessional contribution cap has been $25,000 per year.
However, from the 1st of July 2021, the concessional contribution cap will be increasing by $2,500 to $27,500.
Your cap may be higher depending on whether you have used the full amount of the cap in earlier years. This is referred to as carry-forward unused concessional contributions and you may be eligible for these if your total super balance on 30 June of the previous financial year was below $500,000. You can check your available concessional contributions cap on ATO online services, which can be accessed through myGov.
What if you exceed your concessional contribution cap?
If you exceed your concessional contribution cap, the ATO will send you a letter (determination) and a notice of assessment. This will most likely be sent to your myGov inbox. This message will advise:
- Your excess concessional contributions
- Your excess concessional contributions charge
- What your available options are
If you receive a letter, you must lodge a tax return for that financial year.
Division 293
Division 293 tax applies if your adjusted taxable income and concessional contributions equal more than $250,000 you may have to pay up to an extra 15% tax on your contributions.
For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au