Understanding the tax impact of contribution caps.
Contribution caps limit how much you and your employer You may wish to check that you are not unintentionally
can contribute to super before excess contribution tax is exceeding the cap and paying too much tax using the
charged. Generally the caps are designed to encourage you to attached concessional contributions worksheet.
save for your retirement throughout your working life rather
Your financial adviser can help ensure your super strategy
than catching up close to retirement. The earlier you start
is tax effective.
investing, the more you can grow your super.
It is important for you to be aware of which contributions Concessional contributions to a defined benefit fund
are included in the contribution caps to ensure you do not For members of a defined benefit fund, working out your
unintentionally exceed the cap. concessional contributions can be a little more complicated.
There are two types of caps, the concessional contributions This is because your benefit is based on a formula rather
cap and the non-concessional contributions cap. Generally, than an accumulated account balance and your employer’s
concessional contributions are those made by you or contributions are generally pooled rather than assigned to
your employer, which are taxed at concessional rates. each individual’s account.
Non-concessional contributions are generally contributions For more information, speak to your financial adviser or contact us.
which are made by you or for you from after-tax income.
Non-concessional contributions cap
Concessional contributions cap The non-concessional contribution cap limits how much you
The concessional contribution cap limits how much you and and your spouse can contribute to super as non-concessional
your employer can contribute to super at the concessional contributions before tax is charged.
tax rate of 15% before additional tax is charged.
What are non-concessional contributions?
What are concessional contributions? Non-concessional contributions generally include:
Concessional contributions generally include:
• After tax personal contributions for which no tax deduction
• employer contributions, including the 9% Superannuation has been allowed, made from your net salary or savings
Guarantee and any employer paid fees or insurance premiums
• Spouse contributions made by your spouse into
• salary sacrifice contributions your account.
• personal contributions for which a tax deduction has Non-concessional contributions are not subject to tax in
been allowed. the super fund. Any excess over the cap is taxed at 46.5%.
Concessional contributions are taxed at 15%, which is There are exceptions to the non-concessional contributions
generally less than tax paid on salary and wages. caps which include:
The concessional contributions cap from 1 July 2010/11 • government co-contributions
The annual concessional contributions cap is $25,000 (indexed) • eligible proceeds that relate to Capital Gains Tax (CGT) small
for 2009/10. The annual transitional cap is $50,000 for individuals business concessions, up to a lifetime limit of $1.155 million
age 50 and over which will remain in effect until 30 June 2012. (2010/11 indexed)
• payments that relate to structured settlements or orders for
Age as at 30 June 2010 Concessional contributions
cap 2010/11 personal injuries
Under age 50 $25,000 • rollover super benefits.
At least age 50 $50,000
What is the current non concessional
Amounts over the concessional contributions cap are
effectively taxed at 46.5% (15% contributions tax plus an The annual non-concessional contributions cap is $150,000
additional 31.5%) and count towards your non-concessional for 2010/11.
If you are under age 65 at any time during the financial year,
larger contributions can be made by bringing forward two years Case study
of contributions. Sandra, age 42, earns $150,000 p.a. Her employer pays
for its employees’ insurance through super premiums and
she makes $15,000 p.a. salary sacrifice contributions into
Annual cap $150,000
Maximum with bring forward $450,000 Scenario 1
Sandra’s concessional contributions for the financial year
Amounts above the non-concessional contributions cap
total $29,500, more than the concessional contributions
are taxed at 46.5%.
cap of $25,000. Refer to the table below.
How will I know if I’ve exceeded the caps? The contributions up to $25,000 will only be taxed
15% contributions tax, however the $4,500 in excess
If you have exceeded the cap you should receive an excess of the contribution cap is taxed at an additional 31.5%,
contributions tax assessment for the relevant year from the totalling 46.5% tax paid on the amount in excess of the
Australian Tax Office (ATO) after both of the following cap. This amounts to tax payable of $2,093.
Additionally, the $4,500 above the concessional contribution
• you have lodged your income tax return or notification cap is also included in her non-concessional cap.
that you do not need to lodge an income tax return for
the relevant year Scenario 2
• the fund has lodged your member contributions information Sandra reduces the amount of salary sacrifice contributions
to the ATO for the relevant year. to $10,000 pa. This brings her concessional contributions
for the financial year down to $24,500, less than the
You can also refer to your Annual Statement or track your
concessional contributions cap of $25,000, so her
contributions online. Members of defined benefit plans can
contributions will only incur 15% tax.
contact OnePath to obtain their amount of notional taxed
contributions. She can also make after-tax super contributions which would
count towards her non-concessional contributions cap.
What does this mean for your super?
Concessional contribution type Scenario 1 Scenario 2
Members with additional employer contributions, including
Superannuation Guarantee $13,500 $13,500
salary sacrifice and employer paid fees or premiums,
should ensure that they are not exceeding the concessional Employer paid insurance premium $1,000 $1,000
contribution cap and paying additional tax on their contributions.
Salary sacrifice (before tax) $15,000 $10,000
If your salary sacrifice arrangement, when combined with your
Total $29,500 $24,500
employer’s contributions, exceeds the new cap, you may wish
to consider revising your strategy with your financial adviser.
This example is based on the 2010/11 financial year and is
You can also make personal after-tax contributions from your for illustrative purposes only.
take home pay into your super, which count towards your
non-concessional contributions cap. It is important to check
prior year’s non-concessional contributions. Once again, your Speak to your financial adviser about how your super
financial adviser can assist when planning your contributions. could be affected by the contribution caps and to
ensure your super strategy is tax effective.
Refer to the attached worksheet for a guide to whether
you have exceeded the concessional contributions cap.
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issuer is owned by ANZ it is not a Bank. Except as described in any relevant Product Disclosure Statement (PDS), an investment with the issuer is not a deposit or other liability
of ANZ or its related group companies and none of them stands behind or guarantees the issuer or the capital or performance of your investment. Your investment is subject
to investment risk, including possible repayment delays and loss of income and principal invested.
This information is current as at November 2010 but is subject to change. The information provided is of a general nature and does not take into account your personal needs,
financial circumstances or objectives. The case studies are hypothetical and are not meant to illustrate the circumstances of any particular individual. Before acting on this
information, you should consider the appropriateness of the information, having regard to your needs, financial circumstances and objectives.
You should read the relevant PDS available at onepath.com.au and consider whether a particular product is right for you before making a decision to acquire or continue
to hold the product.
OnePath Custodians Pty Limited ABN 12 008 508 496 AFSL 238 346, RSE L0000673
347 Kent Street, Sydney NSW 2000
Concessional contributions worksheet
Contribution caps limit how much you and your employer can contribute to your super before additional tax is charged.
This worksheet will help you to identify whether you may exceed the concessional contributions cap or if additional contributions
can be made for the 2010/11 financial year.
For the purposes of calculating the concessional contributions cap, use the date the contribution was received by the fund.
Tip: the cap covers all concessional contributions in the financial year, so make sure you don’t miss anything if you have more than
one super account or employer.
Step 1. Determine your concessional contributions cap
$25,000 if you are less than age 50 at 30 June 2011
$50,000 if you are age 50 or over at 30 June 2011 $
Step 2. Subtract your concessional contribution Minus (-)
Compulsory employer contributions
Superannuation Guarantee (SG) contributions are generally 9% multiplied by your salary (your ordinary
time earnings.* $
Other employer contributions Minus (-)
Any additional contributions made by your employer above the compulsory 9% SG for example
employer paid fees or insurance premiums, salary sacrifice or other contributions mandated by an
industrial award or workplace agreement. $
Personal deductible contributions Minus (-)
This includes personal contributions for which you’ve claimed a tax deduction. These contributions can
generally be made if you earn less than 10% of your income as an employee. $
Step 3. Identify the additional concessional contributions allowed in 2010/11^ Equals (=)
Additional concessional contributions you can make in the tax year and remain within the cap.
Contact us Room to move?
Phone 133 665 Salary sacrifice contributions can be an effective way
Email email@example.com of boosting your super.
Speak to your employer to confirm if they can offer
a salary sacrifice arrangement.
Your financial adviser can help ensure your super
strategy is tax effective and guide you in making
decisions which are right for you.
If you would like to locate a qualified financial adviser,
please contact OnePath on 133 665.
* To confirm your SG contribution entitlements from your employer and for more information visit www.ato.gov.au or speak to your employer.
^ The concessonal contributions cap also includes certain foreign pension transfers, certain allocations from a reserve and certain amounts
of directed termination payments. You should speak to your financial adviser to confirm if this applies to you.