Limits on pre-tax contributions
The pre-tax contributions cap for the 2019/20 financial year is:
- $25,000 for all ages
If you’ve supplied your super fund with your Tax File Number (TFN), any pre-tax contributions will be taxed as follows:
- under the cap– 15%
- over the cap - taxed at your marginal tax rate plus an excess contributions charge. May be paid ‘out of your pocket’ to the ATO or you may instruct TelstraSuper to release funds from your account to meet the liability.
Contributions included in the pre-tax cap
- employer Superannuation Guarantee (SG) contributions
- salary sacrifice contributions
- pre-tax contributions to defined benefit arrangements
- pre-tax contributions made to your account and split to your spouse under the Contribution Splitting rules
- the taxable component of a directed termination payment (or the total of directed termination payments plus any transitional eligible termination payments) in excess of $1 million
- insurance premiums paid directly by your employer
- all your pre-tax contributions to all your super funds.
If you don’t supply your TFN to your super fund, all pre-tax contributions will be taxed at the top marginal rate (plus Medicare levy). Caps include any contributions made to TelstraSuper and any other super funds you may be contributing to.
Catch-up pre-tax contributions
Eligible members who contribute less than the cap will be able to ‘carry-forward’ any unused amounts for up to five years if their total super balance (including all balances if they have more than one super account) is less than $500,000 at the end of the previous financial year. This may allow you to make additional pre-tax contributions that would have otherwise exceeded the cap.
Limits on post-tax contributions
The post-tax contributions cap for the current financial year is $100,000 pa per person provided that your total super balance is under $1.6 million. If your balance is over $1.6 million you can not make any post-tax contributions into your super account.
If you’ve supplied TelstraSuper with your TFN, any post-tax contributions will be taxed as follows:
- under the limits – no tax
- over the limits – taxed at the highest marginal tax rate.
Post-tax contributions are not accepted if you haven’t supplied your TFN to your super fund.
Contributions included in the post-tax cap
- post-tax contributions you make to your super
- post-tax contributions your spouse makes to your account
- pre-tax contributions in excess of the pre-tax contributions cap
- transfers from overseas funds.
If you’re aged under 65 years on 1 July of the financial year, you’ll be able to bring forward the next two years of post-tax contributions and make a lump sum contribution of up to $300,000 in one financial year. For instance, if you make a $300,000 contribution during the 2019/2020 financial year, you won't be allowed to make any further post-tax contributions until the 2022/2023 financial year.
If you’re aged 65 years or over you generally cannot bring forward contributions. However, in the year you turn 65 you can bring forward contributions if you are contributing under the work test or work test exemption, see below.
Caps include any contributions made to TelstraSuper and any other super funds you may be contributing to. The bring-forward rule is triggered when the post-tax contribution limit is exceeded in a financial year.
When you can make super contributions
Your eligibility to make contributions is based on your age and work status. Under age 65, all contribution can be made into super. The table below details which contributions can be made into the fund and under which conditions they can be made.
Work test and work test exemption
If you are aged 65 to 74 (inclusive), you are generally required to satisfy the work test in order to make personal contributions and other non-mandated employer contributions. To satisfy the work test you must have worked for at least 40 hours within 30 consecutive days in the financial year in which the contribution was made.
However, from 1 July 2019, if you’re aged 65 to 74 (inclusive) and have a total superannuation balance of less than $300,000 (at the end of the previous financial year), you can also make personal contributions and other non-mandated employer contributions during the first financial year you don’t meet the work test. This is known as the work test exemption.
|Under age 65||Over age 65 but under age 70||Over age 70 but under age 75||Age 75 and over|
|Mandated employer contributions||Superannuation Guarantee (SG) and contributions made under an award or industrial agreement||Yes||Yes||Yes||Yes|
|Voluntary employer contributions||All employer contributions other than mandated employer contributions including salary||Yes||Yes, but subject to work test||Yes, but subject to work test||No, unless 28 day rule applies*|
|Member contributions||Contributions made on an after-tax basis including transfers from an overseas fund||Yes||Yes, but subject to work test||Yes, but subject to work test||No, unless 28 day rule applies*|
|Spouse contributions||Eligible spouse contributions and contributions received from a spouse under contribution splitting rules||Yes||Yes, but subject to work test||No||No|
|Government co-contributions||Co-contribution scheme||Yes||Yes||No||No|
*you may contribute if you meet the work test rule above and the contribution is received by the fund within 28 days after the end of the month in which you turn 75.
Pension phase - transfer balance cap
A transfer balance cap of $1.6 million applies to how much you can transfer from super into a tax-free income stream. If you exceed the cap you will have to remove the excess from your retirement phase income streams and pay tax on the notional earnings. This cap includes balances from all super accounts held in an individuals name.
If your account balance is above this threshold various options are available to you including:
• moving your super back into the accumulation phase, if you currently have an income stream; or
• keeping your super in the accumulation phase, if you don’t have an income stream.
If your taxable income is higher than $250,000 a year, you’ll pay 30% tax on your pre-tax contributions.
If your income is less than $250,000 a year but when you add in pre- tax contributions it’s above $250,000, the 30% tax rate will apply to that part of your pre -tax contributions that are over $250,000. For example, if your income is $230,000 and your pre -tax contributions are $25,000, the 30% tax rate only applies on the $5,000.
Need help making contributions?
At TelstraSuper we’re here to help you build a secure financial future. If you’d like to discuss your options for making contributions or if you have any other queries relating to your account contact us on 1300 033 166 or fill in our online contact form.Online contact form