The Tax Office has announced key Superannuation rates and thresholds effective 1 July 2014. The Concessional Cap will be increased by $5,000 to $30,000 for the 2014 – 2015 year. This is positive news for those under 50 as it can help to boost Super accounts by an extra $5,000 per year.

Income Year	Concessional Cap
2014 – 15	$30,000
2013 – 14	$25,000

The Concessional Cap is the limit on how much can be salary sacrificed into Super in a financial year and includes the compulsory 9.25% Super paid by employers.

Salary Sacrificing is a powerful way to save for your retirement and the term “Concessional” means contributions are taxed at 15% when they enter your Super Fund, as opposed to your marginal rate of tax,which can be as high as 46.5%.

The types of Concessional Contributions that can be made into a Super Fund include:

• Compulsory Employer Contributions or Superannuation Guarantee (currently 9.25%)

• Salary Sacrifice Contributions

• Personal Deductible Contributions where a tax deduction is claimed, i.e. for the self-employed

 

Aged 49 years or over on 30 June 2014?

There is also a temporary increase to the Concessional Contributions Cap for those age 49 or over on 30 June 2014, as follows:

Income Year	Concessional Cap
2014 – 15	$35,000

The increase in thresholds may impact your Contribution strategies.

 

Non-Concessional Contributions Cap

Non-Concessional Contributions are personal Contributions made from after tax income. This Cap is six times the standard Concessional Contributions Cap, hence the Non-Concessional Contributions Cap is increasing by $30,000. See the table below:

Income Year	Non-Concessional Cap
2014 – 15	$180,000
2013 – 14	$150,000

 

 

 

The types of Non-Concessional Contributions that can be made into a Super Fund include:

• Personal after tax Contributions

• Excess Concessional Contributions

• Spouse Contributions

There are also other Contributions (i.e. Government Co-Contributions) that are classified as Non-Concessional Contributions, but are not included under the standard limits for Non-Concessional Contributions. To ensure you fully understand the intricacies of such strategies, it’s recommended you speak to a professional. Also, the Non-Concessional Cap under the bring-forward rule over three years is $540,000 for 2014-15 (up from $450,000 in 2013-14).

 

Seek Advice

As 1 July approaches, it’s a good idea to review your salary sacrifice or personal Super Contributions to adjust for the increase in Caps for the new financial year. You may need to consider pay rises, bonuses, new Concessional Cap levels, retirement strategies etc. Keep in mind that there are breaches for exceeding the limits and excess Concessional contributions are taxed at your marginal tax rate and have a penalty interest component. Its best to seek professional advice from a Financial Adviser to ensure that your contributions strategy is on track for your retirement.