Concessional contributions are before-tax contributions that include both employer contributions (i.e. superannuation guarantee amounts and salary sacrificed amounts) and personal contributions for which a person may be eligible to claim a tax deduction in their personal income tax return.
Concessional contributions are included in the assessable income of the super fund and taxed at 15%.
The concessional contribution limit is $27,500 for 2021/22.
Even if a person receives the majority of their income from employment, they are able to make personal tax-deductible contributions instead of having to enter into a salary sacrifice arrangement to top up their super.
These personal contributions can be made in addition to the 10% an employer contributes on their behalf and they can claim a personal tax deduction for them. The $27,500 cap on concessional contributions applies to the combined amount of the 10% from the employer and any additional amount contributed for which a tax deduction is claimed.
For those intending to make a personal contribution and claim a tax deduction, it is important to notify us so that we can correctly account for it in the super fund.
Please refer below for age limitations and eligibility rules generally regarding making super contributions.
Catch Up Concessional Contributions
Individuals with a total superannuation balance of less than $500,000 in a particular year are able to make ‘catch up’ contributions in 2021/22 if a person did not use their entire contribution cap of $25,000 in 2018/19, 2019/20 or 2020/21. The unused amount may be carried forward for up to five financial years.
For example, Jenny’s employer contributions are $10,000 in each of 2018-19, 2019-20 and 2020-21. Her total superannuation balance at 30 June 2021 was $350,000. This leaves an unused amount of her concessional contribution cap of $15,000 for each year, totalling $45,000 which Jenny can use to increase her concessional contribution cap if needed.
Jenny will therefore have a total concessional cap of $72,500 for 2021-22 comprising the annual concessional limit of $27,500 plus $45,000 of unused concessional contributions from the three prior financial years. She has two years left to use the initial unused contributions from 2018/19.
Non-concessional contributions are after-tax contributions made to super from a personal source. Non-concessional contributions are not included in the super fund’s assessable income and are therefore not taxed on entry into the fund.
If a person has a total superannuation balance in excess of $1.7m as at 30 June 2021, they are not able to make further non-concessional contributions to super in 2021/22.
If a person has a total superannuation balance below $1.7m as at 30 June 2021, their non-concessional contribution limit is $110,000 for 2021/22.
A person aged 66 or under on 1 July 2021 may have an ability to ‘bring forward’ the non-concessional contributions limit for the following two years in accordance with the following table.
|Total Super Balance at 30 June 2021||Age < 67 on 1 July 2021 **||Age 67-74|
|Less than $1.48m||$330,000||$110,000|
|Greater than $1.48m & less than $1.59m||$220,000||$110,000|
|Greater than $1.59m & less than $1.7m||$110,000||$110,000|
|Greater than $1.7m||$0||$0|
For those aged 67 to 74 years, a work test applies in order to be eligible to contribute to super during the 2021/22 financial year.
To satisfy the work test, the person must have worked at least 40 hours in a consecutive 30-day period in the financial year before the fund is eligible to accept the contribution.
For those aged 75 or over, the super fund is only able to accept mandated employer contributions (i.e. superannuation guarantee amounts) made on their behalf.
In the May 2021 Federal Budget, the Government announced its intention to abolish the work test with effect from 1 July 2022 and allow persons aged less than 75 to utilise the above noted bring-forward rules from 1 July 2022 onwards however these budget proposals are not yet law.
Individuals aged 65 or older may be able to make ‘Downsizer Contributions” of up to $300,000 per person subject to satisfying specific criteria upon selling your primary residence. The work test is not required to be met for this type of contribution.
Individuals selling a business or business assets may be able to make contributions using the “CGT Cap” subject to satisfying specific rules of the CGT Small Business concessions.
Contact our Allan Hall Self-Managed Superannuation team if you would like some help on 02 9981 2300.
General Advice Warning
The information in this brochure is of a general nature only and does not take into account your personal objectives, financial situation or specific needs. We recommend that you consider your own financial position, objectives and requirements and seek advice from an authorised financial adviser before making any financial decisions.
Allan Hall Business Advisers Pty Ltd is a Corporate Authorised Representative of Allan Hall SMSF Advisory Pty Ltd ABN 71 608 966 276 AFSL 485203. Allan Hall Financial Planning Pty Ltd is an Authorised Representative of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.