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Superannuation

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Tax and Limits on Voluntary Contributions

The government has set limits on the amount you can contribute to your super each year at a reduced tax rate. If your contributions exceed this limit, you may have to pay extra tax on the excess contributions.

Non-concessional (post tax personal) Contributions

You can make up to $150,000 of personal after-tax contributions to your super fund every year.

  • If you are aged under 65 this can be averaged over a three year period. So you can contribute up to $450,000 over three years, rather than a maximum of $150,000 a year.
  • If you are aged over 65 you will need to satisfy the work test* to make contributions. And, unfortunately, your contributions cannot be averaged out over three years.

Any after-tax contributions above these caps will be taxed at the highest marginal rate of 46.5% including the Medicare levy.

* The Work Test: You must have worked for at least 40 hours in a period of not more than 30 consecutive days in the financial year in which any superannuation contributions are made.

Concessional (pre-tax) Contributions

Generally, you'll only be taxed at 15% for the first $25,000 of before-tax contributions to your super fund every year. This includes both salary sacrifice contributions as well as compulsory employer contributions.

But any before-tax contributions received above this $25,000 cap will be taxed at the highest marginal rate of 46.5% including the Medicare levy.

The good news is, until 30 June 2012, there are transitional arrangements that allow anyone aged 50 or over to make up to $50,000 of before-tax contributions at the concessional tax rate of 15%. So if you turn 50 during this period, you'll benefit from the higher cap.

Concessional Contribution Limits for Defined Benefit Funds

For defined benefit funds, a ‘notional taxed contribution’ (NTC) must be calculated in determining whether a member has exceeded the concessional contribution limits. This is because employer contributions to defined benefit funds are not allocated specifically to individual member accounts, rather member benefits are calculated based on a specific formula and funded from the defined benefit pool.  If you need these calculations please contact you superannuation fund.

Government Co-Contribution

If you earn less than $61,920 a year in tax year 2009/2010 and make a personal post tax contribution to super you may qualify for a super co-contribution from the Government.

To qualify:

  • you must make personal after-tax contributions to super in the current year from your after tax income 
  • your income (‘assessable income’ plus ‘reportable fringe benefits’) for that year must not exceed $61,920
  • your employment income must be at least 10% of your assessable income 
  • you must be age 70 or under 
  • Lodge an income tax return for this financial year.

The maximum co-contribution is $1,000. This applies if your income is $31,920 or less for tax year 2009/2010. For higher incomes the amount of the co-contribution gets progressively less.

If eligible and you have supplied your tax file number (TFN), then the ATO will work out how much you are entitled to and transfer it to your Super Fundaccount.

For further information go to the following: http://www.ato.gov.au/individuals/content.asp?doc=/content/42616.htm

Salary Sacrificing Your Superannuation

Should I salary sacrifice?

If you are considering salary sacrificing your superannuation you should strongly consider taking independent financial advice from a licensed financial adviser.

Employers are prohibited from providing financial advice by the Corporations Act 2001. Chapter 7 of the Act imposes strict licensing requirements on individuals or organisations permitted to provide financial advice.

What is the benefit of salary sacrificing?

Your salary sacrifice contributions are directly paid into your super fund before personal income tax is deducted.  This lowers your taxable income as more of your salary is being paid into super instead of being taxed as income.

How much can I salary sacrifice?

Swinburne allows you to salary sacrifice up to 90% of your salary into superannuation. 

Can I salary sacrifice retrospectively?

No, you can only salary sacrifice future salary (i.e. salary not already earned.)

What form do I need to complete?

Please send completed form to Superannuation Officer HR Mail H14 for processing.

For ESSSuper members

Please contact ESSSuper on 1300 655 476 to arrange form.