News

Changes to Superannuation Excess Concessional Contributions Cap

For the 2013-14 financial year onwards, excess concessional contributions are no longer subject to excess contributions tax.

Individuals who exceed their concessional contributions cap will have the excess amount included in their assessable income for the corresponding year, and taxed at their marginal tax rate rather than the excess contributions tax rate of 31.5%.

Concessional Contribution Cap

 

Concessional (general cap)

2014-15*

$30,000**

2013-14*

$25,000**

Tax on amounts over the cap

Included in your income tax return and taxed at your marginal rates.

 

 

Concessional (general cap)

2012-13

$25,000**

2011-12

$25,000**

Tax on amounts over the cap

31.5%

 

* For the 2013-14 financial year, the concessional cap for individuals who are 59 years old or over on 30 June 2013 is $35,000. For the 2014-15 financial year, the concessional cap for individuals who are 49 years old or over on 30 June 2014 is $35,000.

** There is 15% tax payable by your fund on concessional (before-tax) contributions paid into a super fund. Your super fund usually reduces your super account by your share of this tax.

You will also have to pay the excess concessional contributions (ECC) charge on the increase in your tax liability. This charge is applied to recognise that the tax on excess concessional contributions is collected later than normal income tax. The ECC charge period is calculated from the start of the income year in which the ECC were made and ends the day before the tax is due to be paid under your first assessment for the year that includes ECC.

To reduce your tax liability, the tax office will apply a 15% tax offset to account for the contributions tax that has already been paid by your super fund provider.

You may elect to withdraw up to 85% of your excess concessional contributions from your superannuation fund to help pay your income tax assessment when you have excess concessional contributions. Any excess concessional contributions withdrawn from your fund will also no longer count towards your non-concessional contributions cap.

If your tax or planning-for-retirement strategy includes maximising your superannuation deductions and/or contributions, talk to your BBA Advisor and Rick at Moneyplan to check your strategy is up to date with changes in legislation.