Contributing to Super

Types of Superannuation Contributions and Caps

Contributions made to an Australian super fund are divided into two types: Concessional (pre-tax) or Non-Concessional (after-tax). Both are subject to specific contribution limits or caps - usually of an annual nature, but sometimes multi-annual. The Tables below summarise these two types of contribution and the current applicable caps and some significant changes which took effect from July 1, 2017 and July 1, 2018. The most significant change has been to place a cap of $1.6M - which is indexed, and will change over time - on the amount of total funds which can be held in pension phase account and fund an income stream which attracts no tax.

Concessional Contributions - In Summary
Otherwise known as Pre-Tax or Non-Deductible Contributions
These include: Superannuation Guarantee (SG) contributions Additional employer contributions Salary sacrifice contributions and Contributions made by the self-employed if they meet deductibility rules.
Annual Caps - From July 1, 2017
Up to and including Age 64	$25,000
Age 65 - 74	$25,000 subject to meeting a work test
Catch Up Payments from July 1, 2018
If you have less than $500,000 in your super account, you can make catch-up payments if you haven’t reached your $25,000 a year limit over a rolling five year period.
Spouse Concessional Contributions
Since July 1, 2017, you have been able to make contributions to your spouse’s super if they earn up to $40,000 a year and are aged under 70, and receive a low income spouse offset of up to $540 a year. If aged between 65 and 74 the receiving spouse must meet a work test.
Personal Super Concessional Contributions
Since 1 July 2017, anyone under 75 has been able to claim a tax deduction for personal payments they mad to super up to their annual $25,000 concessional cap. If you’re between 65 and 74 you will need to meet the work test.
Tax Treatment
Concessional contributions (CC) are typically subject to a tax of 15%. The exception is when your adjusted taxable income was greater than $300,000 up until 30 June 2017, or $250,000 from that date - these contributions are subject to an additional tax of 15% (effective tax rate of 30%). Total concessional contributions from all the sources above cannot exceed the above annual cap - if they do then the additional contributions are taxed at your actual marginal tax rate, plus an interest charge - although you can choose to withdraw the excess contributions.

What if you exceed your Concessional cap contribution? Bearing in mind the changes effective from July 1, 2018, which may provide you with some additional "headroom" if you have less than $500,000 in your super fund, any excess contributions will be taxed at your marginal tax rate, plus an interest charge called an Excess Concessional Contribution Charge. The excess contributions are eligible for a 15% tax offset, to reflect the fact that a 15% contributions tax has already deducted from the contribution upon entry to the super fund.

Non-Concessional Contributions (NCC) - In Summary
Otherwise known as "After-Tax" or "Undeducted Contributions"
These include all contributions made from sources which have already been subject to tax, and include foreign pension transfers - except that part of the pension capital value which reflects growth since the date of residency - and Government co-contributions.
Caps - Up to June 30, 2017
Annual	$180,000
Bring Forward Basis (3 Years)	$540,000
Caps - From 1 July, 2017
Annual	$100,000
Bring Foward Basis (3 Years)	$300,000
"Downsizing" Contribution - From 1 July, 2018
If you are 65 or older and you or your spouse have owned your residence in Australia for a period of 10 years or more at the date of sale, you may each be able to make a non-concessional contribution to super of $300,000, referred to as a "downsizing" contribution - subject to any contribution being made into super within 90 days of sale.
Lifetime Cap - From 1 July, 2017
If your total super balance is at or over $1.6 million on June 30 of the previous year you won’t be able to make any further non-concessional contributions to your super.
Tax Treatment
From July 1, 2017: If you had more than $1.6 million in your retirement income account on July 1, 2017 you needed to transfer the excess into a super (accumulation) account where you would pay 15% tax on earnings within the fund, or withdraw it as a lump sum. Note that the NCC caps are a function of the annual Concessional Contributions Caps - but now a multiple of 4 times the cap, rather than the previous multiple of 6.

Access to Superannuation Benefits

Superannuation benefits fall into three categories:

• Preserved benefits; this category now includes the vast majority of superannuation balances (all contributions post July, 1999)
• Restricted non-preserved benefits; although not preserved, these funds cannot be accessed until an employee meets a condition of release, such as terminating their employment in an employer superannuation scheme.
• Unrestricted non-preserved benefits. Do not require the fulfillment of a condition of release, and may be accessed upon the request of the employee.

You can only (generally) access your preserved superannuation funds:

• when you turn 65 (even if you haven’t retired), or
• when you reach preservation age and retire, or
• when you reach preservation age and access a Transition to Retirement (TRIP) pension, while continuing to work.

The Preservation Ages are: 

Date of Birth	Preservation Age
Before 1 July 1960	55
1 July 1960 - 30 June 1961	56
1 July 1961 - 30 June 1962	57
1 July 1962 - 30 June 1963	58
1 July 1963 - 30 June 1964	59
1 July 1964 and after	60

An Overview

Within a very short period, for good and less worthy reasons, we have created a retirement savings system that ranks very highly in world terms, but is exceptionally complicated in some respects. Just how complicated is illustrated by the schematic overview of the super system available for download below.

Before using the schematic you should read and make sure you understand the information above and note that it is intended only as background information for individuals; it is not intended as an alternative to discussions with either your financial advisor or Centrelink and nor is the schematic intended to represent a complete overview. Consistent with our approach throughout the site, the intention is to provide you with information so that you better understand your own position prior to obtaining professional advice. It is free for personal use, but may not be used within commercial enterprises without our prior written approval.

Australian Superannuation - A Flow Chart Illustrating Contributions and Payments