Superannuation plays an important role in securing your lifestyle after retirement. Apart from the compulsory superannuation obligation contributed by your employer, you can pay an extra amount at any time which helps to save your tax now and increase your savings for the future. However, there are caps on the amount of super you can contribute each financial. Contribution within such a cap is called a concessional contribution. If you contribute more than the cap you end up paying extra tax.
Concessional contributions include:
These contributions are taxed at @15 % in your fund.
For the years 2014-15, the concessional cap is $30,000 if you are younger than 50 years. For those older than 50 years in 2014-15, the concessional cap is $35,000. The amount above this cap will be added to your personal income and taxed at a marginal rate.
The non-concessional contribution is the amount of contribution you make to your super out of your after-tax income. The non-concessional cap for the year 2014-15 is $180,000. If you contribute more than this amount, the excess is taxed at @49%. However, you will have the option to withdraw all excess non-concessional contributions and 85% of associated earnings. There is also bring forward provision whereby you can go over the non-concessional cap by up to 2 years’ worth of contributions without.
You need to continuously monitor the movement of your super fund to make sure that you are not exceeding the concessional cap. Contributions are counted towards the caps in the year in which they are actually received and credited by your super fund. For example, your employer may send April–June quarter’s super in July which will be counted towards the next financial year caps. Hence, you need to be very careful to monitor the timing of the contribution to your super fund.