The annual post-tax contribution cap will continue, however the cap will reduce from the existing amount of $180,000 per year to $100,000 per year from 1 July 2017. Individuals under age 65 will continue to be able to bring forward three years’ worth of post-tax contributions ($300,000 over three years for those under age 65).
The annual-pre tax contribution cap will be reduced to $25,000 for members of all ages (down from $30,000 for those aged under 49 at the end of the previous financial year or $35,000 otherwise).
Limits on pre-tax contributions
The pre-tax contributions cap for the 2016/2017 financial year is:
- under 49 years on 30 June 2016: $30,000
- 49 years or over on 30 June 2016: $35,000.
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. 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).
Limits on post-tax contributions
The post-tax contributions cap for the current financial year is $180,000 pa per person.
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 your marginal tax rate. 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.
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, you’ll be able to bring forward two years of post-tax contributions and make a lump sum contribution of $540,000 in one financial year. So if you make a $540,000 contribution during the 2016/2017 financial year, you won't be allowed to make any further post-tax contributions until the 2019/2020 financial year.
If you’re aged 63 or 64 you’re able to bring forward two years of contributions without meeting the work test in the subsequent two years. If you’re aged 65 years or over you cannot bring forward contributions.
Tax for high-income earners
If your taxable income is higher than $300,000 a year, you’ll pay 30% tax on your pre-tax contributions.
If your income is less than $300,000 a year but when you add in pre- tax contributions it’s above $300,000, the 30% tax rate will apply to that part of your pre -tax contributions that are over $300,000. For example, if your income is $270,000 and your pre -tax contributions are $35,000, 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