We here at Gotsis Accounting can assist you with all of your superannuation accounting and tax matters, as we have helped many of our clients. To begin with, below is a summary of key information on superannuation concessional, non-concessional and other superannuation related matters which will assist you.
- Concessional contributions include amounts paid into superannuation by your employer to meet the superannuation guarantee obligations, amounts paid under a salary sacrifice arrangement and deductible personal contributions.
- From 1/7/2014 you can contribute up to $25,000 per year into super ($35,000 for those aged 49 years and over) and only pay 15% tax. This allows you to build up your wealth quicker rather than paying a tax rate of 46.5%. However, the government has proposed that from 1 July 2012, individuals with income exceeding $300,000 will have their contributions taxed at 30%.
- Excess concessional contributions is subject to excess contributions tax, which would result in a total tax of 46.5% on the excessive amounts. In addition, the excess concessional contributions also count towards an individual’s non-concessional contributions cap.
- From 1 July 2011, individuals who breach the concessional contributions cap by $10,000 or less can request the excess contributions be withdrawn from their super fund and refunded to them. Those excess concessional contributions will then be taxed at the individual’s marginal tax rate instead of 46.5%. This treatment may only apply for contributions made on or after 1 July 2011 and is only applicable to those who exceeded their concessional contributions cap for the first time.
- Non-concessional contributions are post-tax amounts that you have not claimed a tax deduction for. Non-concessional contributions are not included in the assessable income of the superannuation fund, unless you contribute more than the non-concessional contributions cap amount. The excess contributions tax applicable to the excess non-concessional contributions is 46.5%.
- From 1/7/2014 the non-concessional contributions cap is $180,000, or $540,000 under the ‘bring forward option’ over 3 years.
Reportable Superannuation Contributions
From 1 July 2009, contributions made to a superannuation fund under salary sacrifice, as well as deductible personal superannuation contributions will be included as a reportable superannuation contribution on your payment summary. These contributions are included in your adjusted taxable income to determine your eligibility to benefits from Centrelink or the Family Assistance Office, the availability of various tax offsets such as senior Australian tax offset and Medicare Levy Surcharge threshold calculation, and the level of repayments to your HECS-HELP debts.
The Government Co-Contribution Scheme
In the 2011/12 year, the government will contribute a maximum of $1 for each $1 that you contribute to superannuation as a non deductible personal contribution, with a cap of $1,000 per year. To be eligible for the full co-contribution, your income (including reportable fringe benefits) should be no more than $31,920 for the 2012 income year. The co-contribution rate will reduce by 3.333 cents for each dollar that your total income (including reportable fringe benefits) exceed $31,920, phasing out completely at $61,920.
To be eligible for the government co-contribution, you must also be less than 71 years of age at the end of the income year. In addition, at least 10% of your total assessable income is from running your own business or from eligible employment or both. Employer contributions, salary sacrifice contributions, deductible personal contributions and spouse contributions will not be counted for the purposes of calculating the co-contribution.
The government has announced that it will be reducing the co-contribution rate to 50 cents of each dollar contributed, to a maximum of $500 from 1 July 2012 onwards. If you earn more than $33,516 your co-contribution entitlement reduces by 3.333 cents for every dollar you aren over $33,516 until it cuts out at $4,8516.
Tax Implications on Your Superannuation Pension
If you are over 60 and retired you do not need to pay tax on your superannuation pension if it is paid from a taxed source. A taxed source is one where contributions tax was paid by the superannuation fund. Contributions tax would generally be paid by the superannuation fund on the contributions made by your employer, contributions made through salary sacrifice or on deductible personal superannuation contributions. If the pension is paid from an untaxed source, you will have to pay tax on your superannuation income stream at your marginal rate plus Medicare Levy, irrespective of age. However a 10% tax offset on the amount of the pension is available if you are aged over 60.
Self-Employed and Superannuation
If you are self-employed and have paid personal superannuation contributions during the year you can claim a deduction on contributions that you have made to a compliant superannuation fund or retirement savings account. You must give a notice to your superannuation fund in the approved form advising your intention to do this and receive confirmation from your superannuation fund acknowledging receipt of this notice. You must be fully self-employed or have no more than 10% of your assessable income and reportable fringe benefits total from an employer to obtain the deduction.
The superannuation guarantee rate increases from 9% to 9.25% p.a. from 1 July 2013 and a further increase to 9.5% from 1st July 2014. In addition, the superannuation guarantee age limit of 70 will be removed from 1 July 2013, and employers will be required to contribute to complying super funds of eligible mature age employees aged 70 years and older.