Excess contributions tax is a penalty tax applicable when an individual exceeds the concessional contributions cap or the non-concessional contributions cap. The penalty tax is imposed on the individual rather than the super fund, although the tax can be deducted from the individual’s super account.
The following articles refer to Excess contributions tax and superannuation.
Q: Under the 2-year bring-forward of non-concessional contributions, if a person makes a contribution of $150,001 when age 64, he can continue to contribute the balance of the $450,000 anytime during the next 2 years without having to satisfying the work test, is that right?
Q: I’m 53, put $24,700 of pre-tax contributions into my super account ($950/fortnight) with my employer also putting in about $7,000 a year. So, the super rules mean I can still salary sacrifice this $950/fortnight amount until July 2012, attracting only 15% tax, then every dollar contributed after that to my account over $25,000 attracts %30 tax.
Q: If you turn 65 and retire after 1 July 2010, can you still make the $450,000 bring-forward non-concessional contribution as long as it’s before 30 June 2011? Or do you have to satisfy the work test to do so?
Q: I was born in April 1961 (turning 50 in April 2011). Can you explain which financial year I am considered to be over 50 in relation to the $50,000 concessional contributions cap?
Under the superannuation rules, the annual contribution caps are indexed in line with movements in average wages. Wages have increased in the past year, but the concessional (before-tax) and non-concessional (after-tax) caps are not increasing for the 2010/2011 year.
In the May 2010 Federal Budget, the Government announced that the ATO would have discretion to deal with Australians who exceeded contributions caps, but… wait for it… only from the 2010/2011 year. Come on guys!
Although superannuation savers have generally done well from the Federal Government’s Henry Tax Review announcements, and the May 2010 Budget, hidden away in the detail of the Budget announcements is a shocker.
This article is a must-read if you make contributions to a super fund, in addition to your employer’s compulsory Superannuation Guarantee contributions. Hundreds of thousands of Australians who are making a serious effort to save for retirement are expected to receive a financial shock after the financial year ends in June 2010. Due to the [...]
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