Non-concessional contributions are super contributions that are from your after-tax income, and not taxed into your super fund.
Is there a cap on non-concessional contributions?
From 1 July 2017, there has been a cap of $100,000 for non-concessional contributions. If you contribute more than the cap, you will need to pay extra tax. If you have more than one fund, the total of all non-concessional contributions made to all your funds during the financial year will be added together and be included towards the cap.
Sometimes, your own cap might be different to $100,000:
- It can be higher if you can use bring-forwards arrangements
- It can be nil If your super balance is more than or equal to the general transfer balance cap ($1.6 million from 2017-2018)
What types of non-concessional contributions are there?
- Contributions you personally make, or your employer makes on your behalf (from after-tax income).
- Contributions that your spouse makes into your super fund (this is excluded when you spouse is your employer).
- Personal contributions that have not been claimed and allowed as an income tax deduction.
- Contributions surpassing your capital gains tax cap amount.
- If you are under 18 years old, contributions made for you by someone else (contributor cannot be your employer).
- Retirement benefits you take out from a super fund and ‘re-contribute’ to super, which you have not claimed or been allowed as as income tax deduction.
- Life insurance premiums and fund fees (in some cases).
- Most foreign super funds transfers, which includes New Zealand KiwiSaver contributions.
It is worthy to mention that some types of contributions may not be accepted by your super fund. This can be dependent on your work status and age. If you go over the non-concessional contributions cap, the Australian Taxation Office (ATO) will contact you to let you know your options by sending a determination letter. You must lodge a tax return for that year. If you are unable to lodge your tax return by the due date, and do not want the ATO to send you a determination before lodgement, you would have to request a lodgement deferral. The ATO will manage the release of money from your super. You may be responsible for paying additional tax.
For more information on non-concessional contributions, contact Wagtail Wealth today.
IMPORTANT NOTE: This information is general advice only and does not take into account your personal circumstances, goals and objectives. Therefore, you should consider its appropriateness for your circumstances before acting on this information.