Concessional Caps For Super Have Changed Again

When it comes to superannuation, there is a limit to the amount of “before tax” money that can be paid into your account each financial year.

Since its introduction, the upper limit on what you can pay in – known as the “concessional cap” – has ranged between $50,000 for those aged under 50 and $100,000 for those aged over 50, down to $25,000 for all. On 1 July 2014, the concessional caps for super contributions  changed again.

What Are The New Superannuation Concessional Gaps?

Currently, the superannuation concessional caps that apply are as follows:

Income year Cap for those aged 59 years or over on 30 June 2013 Cap for those aged 49 years or over on 30 June 2014 Cap for those aged under 50
2014–15 $35,000 $35,000 $30,000

Source: ATO

Why would you put extra before-tax money into super contributions?

In short, because for many people it is a tax-effective way to save!

When you make a concessional contribution into superannuation, it comes out of your before-tax money. Sometimes it is called a “salary sacrifice”. If you earn more than $37,000, your income tax rate is 32.5% plus Medicare levy. The contributions tax that applies to concessional contributions, on the other hand, is just 15%. Here’s an example:

Normal Taxation Contributing to Super
Before-tax income $1,000 $1,000
Income tax + Medicare levy $345 0
Superannuation contribution $0 $1,000
Superannuation tax $0 $150
Amount available to invest $655 $850

A word of warning: it’s important to note that concessional super contributions include your employer’s 9.5% super guarantee contribution, so when you’re calculating the maximum amount that you can concessionally contribute, be sure to take that into account.

Can I make extra payments into my super?

Generally, most people can make extra payments into their superannuation, but there are limits on how much you can contribute, both in relation to before-tax payments and after-tax payments.

Some types of superannuation payments you need to know about are:

  • Superannuation Guarantee
  • Salary Sacrifice
  • Co-contribution
  • Low Income Super Contribution
  • After-tax contribution

 

In the market for a super fund? Or considering switching? Check out our comparison table below which provides a snapshot of the current market offerings with links direct to the providers website. Please note that this table has been sorted by our star rating (highest to lowest, A-Z) and is based on the policy holder being 30-39 years of age, with a super balance of between $50,000 and $100,000.

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