Contributing to Super
What you need to know
Topping up your superannuation just got a little less dangerous with new rules that allow excess nonconcessional super contributions to be refunded.
Before the change, a huge number of people were penalised by excess concessional contributions tax because they contributed over the allowable level of contributions. It was not uncommon to see $70,000 tax bills from what was a relatively small over contribution. And, there was very little you could do about it even if the contribution was not deliberate.
The new rules mean that members can have the excess super contributions refunded to them PLUS 85% of the associated earnings on those amounts. The full earnings will then be included in your assessable income and taxed at your marginal tax rate. You will then be entitled to a non-refundable tax offset equal to 15% of the associated earnings. Simple right? Maybe not but it’s a lot easier to understand than a $70,000 tax bill for going even $1 above your contributions limit.
These new rules apply to excess non-concessional contributions made from the 2013/14 financial year onwards. So, if you were affected by excess contributions tax, something can be done about it.
For professional advice about super contributions, speak to the friendly team at Impact Accounting today.