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?
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the concessional contributions cap by less than $10,000, you'll be given the opportunity by the ATO to have the amount withdrawn from your super and pay you as an income and be taxed at your marginal tax rate.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.
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.