2015/16 superannuation caps and thresholds released

ATO, superannuation contribution caps, superannuation thresholdsUpdate: The changes to superannuation announced in the 2016 Budget, if enacted, would have implications for some people – particularly in regards to the Non-Concessional contributions cap. Also, the superannuation caps for 2016/17 have been released.

The ATO has released the superannuation contribution caps and thresholds for the 2015/16 financial year.

Though the superannuation contribution caps are no longer frozen, wages have not grown sufficiently to cause the caps to increase. The general concessional contribution cap for 2015/16 remains $30,000 and the non-concessional contributions cap will stay at $180,000. Read more...

Higher contributions tax for those on over $180,000: Mercer

Mercer four point plan: higher contributions tax (Div 293), lifetime contributions caps, limit ECPI and changes to LISC.Extending Division 293 tax to everyone on the highest income bracket is one of the four points in a plan to improve the superannuation system released by consulting firm Mercer.

The four points of the plan are:

  1. Division 293 tax to apply to everyone on the highest tax rate bracket
  2. No-one in the 19% tax bracket to pay contributions tax
  3. Introduce lifetime contribution caps in addition to annual contributions caps
  4. Limit tax-free status of income supporting a pension via an asset cap

Currently Division 293 tax increases the contributions tax for high income earners, those earning more than $300,000, by 15%. Under Mercer’s plan this would extend to people earning more than $180,000. Based on the the 2014/15 tax rates these people would pay 30% on their contributions and have a marginal tax rate of 45%. Read more...

Returning super contributions: age, tfn, fund capped & mistakes

Returning Super ContributionsThere are certain circumstances in which a super fund is required to return a superannuation contribution received:

  • Age restricted
  • Tax File Number
  • Fund Capped Contributions

Though it is also possible for a super fund to return a contribution that was made by mistake.

Age restricted

Regulation 7.04 of SISR creates a number of restrictions around super funds accepting contributions, many of these are related to the members age:

When can a super fund accept a contribution?

 Type of Contribution / Members Age <65 65 – 69 70 – 74 75+
Mandated Employer Contributions (Super Guarantee) Yes Yes Yes Yes
Other Employer Contributions Yes Yes * Yes * No
Member Contributions Yes Yes * Yes * No

*If work test is passed.

If a super fund receives a contribution which it is unable to accept – for example a member contribution from someone over age 75, “the fund must return the amount to the entity or person that paid the amount within 30 days of becoming aware that the amount was received in a manner that is inconsistent [with the subregulation]” – SISR 7.04(4)a. Read more...

Fund Capped Contributions and Super Funds

Fund Capped ContributionsThe Fund Capped Contribution rules limit the amount that a super fund can accept in a single contribution. Super funds do not have to monitor contributions for excess concessional or non-concessional contributions throughout the year, but they do have to check that each individual contribution is less that the Fund Capped Contribution limit. For example, if a members non-concessional cap was $ 450,000, they could make three contributions during the year of $ 200,000 each, the fund could accept these contributions even though they total an amount over the contributions cap. However if the member made a single contribution of $ 500,000 the fund would not be able to accept all of the contribution – see ATO ID 2007/225. Read more...