The Australian Taxation Office has been issuing reminders to taxpayers, telling them to check the amount of pre-tax (concessional) contributions they are making to their super funds, ahead of changes to the contribution rues on July 1.
Under the current superannuation rules, people over 50 can contribute $35,000 of concessional contributions each year and people under 50 can contribute $30,000 a year.
From July 1, the cap on concessional contributions falls to $25,000 a year for super fund members of any age.
The change could catch some super fund members by surprise.
Where ATO records show that the new concessional contributions cap may affect a taxpayer, it has been writing to those people to advise them to check their contributions levels.
Concessional contributions include compulsory employer contributions, extra contributions made under salary sacrifice arrangements and other amounts paid by an employer from a taxpayer’s pre-tax income to their super fund.
From July 1, people who contribute more than $25,000 from their pre-tax income to super may have to pay extra tax. Excess contribution will be taxed at the taxpayer’s marginal rate plus an interest charge.
Concessional contributions are taxed 15 per cent. A person whose income is more than $300,000 a year pays an additional 15 per cent, taking the total tax on concessional contributions to 30 per cent.
From July 1, this additional tax burden will apply to people who taxable income is ore than $250,000 a year.