Superannuation

If you are a self employ person you are able to contribute to your superfund as a concessional contribution to claim a tax deduction from your individual tax return. if you are an employee whose employer is required to contribute to superannuation are not eligible to claim a tax deduction. Instead the government may make a co-contribution to their fund. To be eligible for the co-contribution your assessable income (including reportable fringe benefits) should be no more than $61,920 for the 2010 income year. You must also be less than 71 years of age at the end of the income year. For the 2010 income year the government will contribute a maximum of $1 for each $1 that you contribute to superannuation with a cap of $1000 per year.

Your employer contributions (including contributions made under salary sacrifice arrangement) are called concessional contributions. The cap limit is for concessional contributions is $50,000. This cap applies until 30 June 2012 for people 50 years old or over. If you were 50 years old or over, the annual cap for the 2007-08 and 2008-09 financial years was $100,000. If you are 50 years old or over, the annual cap for the 2009-10, 2010-11 and 2011-12 financial years is $50,000. If you have more than one fund, all concessional contributions made to all your funds are added together and count towards the cap. This cap is not indexed. If annual contributions exceed the applicable cap amount, the excess will be taxed at the highest marginal rate, plus medicare levy.

Please note; The government has announced changes that,  will permanently increase the concessional contributions cap to $50,000 for individuals who have total super balances below $500,000 and are 50 years old or over. These changes have not been passed by the parliment

From 1 July 2007 a limit of $150,000 per year was placed on non-concessional contributions which are post-tax amounts that you have not claimed as a tax deduction. This cap amount may be indexed annually but is still unchanged for the 2010-11 income year. If you contribute more than the cap amount you will be taxed at the highest marginal rate plus Medicare currently 46.5% on those excess contributions. There are transitional rules that apply to taxpayers who are nearing retirement.

For people under 65 years old may be able to make non-concessional contributions of up to three times their non-concessional contributions cap over a three-year period. This is known as the ‘bring-forward’ option.

The bring-forward cap is three times the non-concessional contributions cap of the first year. If you brought forward your contributions in 2007-08, it would be 3 x $150,000 = $450,000. 

All contributions made to a superannuation fund under a salary sacrifice arrangement will now (from 1^st July 2009) be included in the reportable employer superannuation contributions amount shown on your PAYG payment summary. Also included will be any superannuation contributions for which a tax deduction has been claimed. This means that any entitlement you have to any benefits from Centrelink or the Family Assistance Office that are subject to an income test will take into account those amounts. It will also contribute to the calculation of any Child Support payments and be used to determine your liability to such things as the Medicare levy surcharge or repayments of HELP debt. It may also impact on any tax offsets that you have been entitled to claim on your tax return.

If you are a low or middle-income earner,and you are eligible for Government co-contribution, what you needs to do is make a personal contribution to your super fund or retirement savings account and lodge your income tax return.