You know the grind if you exceed the upper ceiling on your Super contributions. This is probably why you will be none the poorer knowing where you exactly stand. The sun rose on the first of July this year, changing, for at least the foreseeable future, the super contribution caps.
Concessional contribution caps
For individuals under 49, the caps moves upwards to $30,000, while for those older than 49, the ceiling is $35,000. This is for the concessional contributions. For non-concessional contributions, let us also go through the caps. If you are below 65, your limit is $180,000 a year, and with the new bring-forward rules, you can now put in $540,000 over a 3-year tenure.
If you are 65 or older, the same $180,000 applies, but you have to pass the ‘work’ criterion. To elaborate, you must have been employed for at least 40 hours over a period of 30 consecutive days (and not more) in the financial year you propose to make a contribution.
What’s gainfully employed?
When the clause says employed, it uses the term gainfully employed. Such employment may include, but is not restricted to, babysitting, lawn-mowing, farming and gardening; in short pursuits which fetch you remuneration.
While the question whether 40 hours can be included over weekends or not assumes some sort of importance, the idea is only to ensure that the 40 hours are spread over a consecutive period of 30 days and not stretched over, say, a 3 or a 6 month period.
What constitutes concessional contributions?
So now you may like to know what constitutes concessional contributions. Employer contributions and salary sacrifices certainly come within the arc of the ‘concessional’. Member’s personal contributions are also welcome in scenarios where they can claim tax rebates.
Exceeding contribution cap
Let me wrap up this piece by discussing the penalties you may attract on exceeding the ceiling of contributions. As a first, the amount you contributed beyond your cap will be made a part of your assessable income and treated to a non-refundable concessional contributions tax offset which will be equivalent to 15%.
You will also be charged an interest which will be tantamount to 3% added to the RBA rate. The interest will apply from the commencement of the financial year and run till the day the payment shows ‘due’ under your primary assessment notice.
If you think this is bulk information and you are finding it difficult to process, feel free to get in touch with me at SMSF Advice Hub. Will be more than glad to help.