How much can I contribute?
There are contribution caps on how much you can contribute without incurring a penalty. Tax concessions entice members to contribute to their super but exceeding the limits carries severe penalties.
- SG contributions
- Salary sacrifice contributions.
- Personal contributions by self-employed persons for which they have claimed a tax deduction.
Concessional contributions have a limit of $25,000 pa for everyone. From July 2018 you can carry forward the unused portion for up to 5 years. This will only apply if you have a total super balance of less then $500,000.
If you exceed the $25,000 limit you can withdraw up to 85% of your excess contributions to pay the extra income tax. Any excess left in the account counts towards your non-concessional contributions cap, and could result in penalty tax.
These are personal contributions for which no tax deduction was claimed. For this reason they are sometimes known as “undeducted contributions”
The contribution limit for these contributions is $100,000 pa which can be rolled into a single contribution of $300,000 every three years. You must be under age 65 to roll three years contributions into one. If your super balance exceeds $1.6 million you will not be able to make non-concessional contributions.
The $100,000 limit will be indexed in $10,000 increments.
If you don’t use the $300,000 it does not carry forward – it only applies to future years.
If you exceed the cap you have the opportunity to withdraw the excess and just the earnings on the excess will be added to your normal income. If you leave the excess contributions in your fund they will effectively be taxed at 49%.