Jeffrey Joel
Jeffrey Joel MD at Auspac Trading NSW PL

Asked this question on 6/12/12 -Superannuation

What is the maximum amount one can contribute to super?

What is the maximum amount one can contribute to super, inclusive of compulsory super? And what if that amount exceeds the allowable limited? Any penalties or just pay the tax?

Top voted answer
Shane Gold

Shane Gold Compliance Officer at First State Super

Top 30% Superannuation

For the 2012/13 financial year, you can contribute up to $25,000 of concessional contributions. This includes SG and salary sacrifice.

For a non-concesional contribution (personal), you can put in $150,000pa or you can use the bring forward provision which allows you to make $450,000 over a 3 year period.

These amounts are the contributions caps. If you exceed these caps, you will pay a total of 46.5% contributions tax. You just pay more tax for the excess amount which is at the highest marginal tax rate.

A new law has been introduced that if you exceed the concessional contributions cap by less than $10,000, you'll be given the opportunity by the ATO to have the amount withdrawn from your super and pay you as an income and be taxed at your marginal tax rate. You can only use this new rule once in your lifetime. If you breach the cap and whether or not you accept the offer from the ATO to have the excess amount paid to you as an income, you'll not receive another chance should you breach the cap again.

Shane Gold

An update to the above, following the federal budget announcement on 14 May 2013. In this year’s budget, the government has made some changes to the concessional contributions cap and excess concessional contribution.

From 1 July 2013, people aged 60 and over will be able to make $35K (increased from $25K) concessional contribution (SG & Salary sacrifice). From 1 July 2014, this cap will also apply to people over the age of 50. And it is expected that from 1 July 2018, everyone regardless of age, will be able to make $35K concessional contribution.

A concessional contribution is taxed at 15%. An excess concessional contribution (amount above the cap) will be subject to a further 31.5%, making it 46.5%, the highest marginal tax rate.
Currently, if you breach this cap by less than $10K, the government allows you an option to take a one-off withdrawal of the excessive amount, and this amount is paid to you as an income. This amount is taxed at the highest marginal tax rate (46.5%).

However, under the new rule recently announced, you can withdraw any excess concessional contributions from your super fund and receive it as an income. You will only be taxed at your marginal tax rate, not at the highest marginal tax rate. The $10K limit has been abolished.

There have been no changes to the non-concessional contributions cap.

Liam Shorte

Liam Shorte Director, SMSF Specialist Advisor & Financial Planner at Verante Financial Planning & The SMSF Coach

Top 20% Superannuation

Self Employed or small company owners can double dip on the concesssional contribution limit?
The taxpayer could have $25,000 concessional contributions made during the year, then make an additional $25,000 in June, enabling a $50k tax deduction.  $25k is allocated to the member in the current financial year, with the $25k in June taxed within the fund, but the allocation not occurring until the following financial year (before 28 July).  you need to be aware amounts to be held over for the 2013/14 year means you cannot make a further contribution next year unless you engage the same strategy. 
Talk to. SMSF Specialist about this strategy as they will have work wih your tax agent ad ATO's system not up to speed and tax agent will need to follow a procedure.

Liam Shorte

This strategy is really only available to SMSF owners but check with your Super Fund. Also For those over 60 there is an option to boost this strategy a further $10k