|
| |
What is the maximum I can invest in super?
The answer to this question depends largely on the source of the money you are investing - in particular whether any tax has already been paid on it.
Monies may be invested in the superannuation environment from a number of sources. Once they enter the superannuation environment they are deemed to be either concessional or non-concessional contributions.
Concessional contributions:
Concessional contributions include employer contributions, pre-tax contributions made by you and any contributions you make for which you claim a tax deduction. They are also referred to as deductible contributions.
Concessional contributions include:
- employer superannuation guarantee contributions,
- additional employer contributions,
- salary sacrifice contributions, and
- contributions made by the self-employed for which a tax deduction is claimed.
From 1 July 2007, concessional contributions are limited to $50,000 per person per annum. This cap is indexed annually in line with the Average Weekly Ordinary Time Earnings (AWOTE). A five-year transitional cap of $100,000 per year applies for the financial years 2007/08 to 2011/12. You will be eligible for this transitional cap if you are at least 50 years of age by 30 June of the relevant financial year.
Concessional contributions are taxed at 15 per cent upon receipt into a superannuation fund. Concessional contributions in excess of the cap will be effectively taxed at the top marginal tax rate plus the Medicare levy (an additional 31.5 per cent on top of the original 15 per cent paid by the fund).
Concessional contributions above the limit will also count towards the non-concessional contributions cap.
Non-concessional contributions:
Non-concessional contributions are sourced from after-tax income and can include:
- personal member contributions
- spouse contributions, and/or
- Government co-contributions.
From 1 July 2007, there is a cap on the amount of non-concessional contributions you can make:
- If you are under 65 years old, you are able to contribute up to $150,000 per annum or $450,000 averaged over three years; or
- If you are 65 to 74 years old, you are able to contribute up to $150,000 per annum (no averaging) if you meet the work test.
- Individuals 75 years or over are not eligible to make a non-concessional contribution into their superannuation.
This non-concessional cap is indexed annually in line with the Average Weekly Ordinary Time Earnings (AWOTE). Super funds may not accept contributions in excess of this cap.
Note:
- Non-concessional contributions below the cap will not be taxed when invested in superannuation and they will be tax-free when withdrawn from superannuation or paid as an income stream.
- Non-concessional contributions in excess of the cap will be taxed at the top marginal tax rate plus the Medicare levy (46.5 per cent).
- The earnings on non-concessional contributions are taxed concessionally at 15 per cent in a superannuation fund.
| |
|
