Tax on contributions and rollovers
Concessional contributions
Concessional contributions are generally tax deductible (either to your employer or you personally). Concessional contributions are taxed in the fund at the rate of 15%.
Amounts in excess of the concessional contributions cap will be subject to excess contributions tax at the rate of 31.5% on top of the 15% already paid in the fund. You may pay the excess contributions tax directly to the ATO yourself, or withdraw an amount from a superannuation fund to pay the tax.
Further, the amount of the excess concessional contributions will be counted towards your non-concessional contributions cap (together with any other contributions made that count towards that cap) in the relevant period.
If you do not quote your tax file number, certain concessional contributions (for example, employer contributions) can be subject to additional tax in the Fund, whilst others (for example, personal contributions including those being claimed as a tax deduction) will be unable to be accepted.
For details on providing your TFN please see > Tax file number collection.
Non-concessional contributions
Non-concessional contributions are generally not tax deductible. In some cases, personal non-concessional contributions may attract a Government co-contribution. If you are a low income earner, your spouse may be eligible for a rebate of up to 18% in respect of non-concessional contributions they make on your behalf (subject to certain conditions).
Non-concessional contributions that are within the non-concessional contributions cap are not taxed in the Fund. Amounts that exceed this cap for the income year will be subject to an excess contributions tax at the rate of 46.5%. You will be required to pay the tax from money released from a superannuation fund.
No tax applies upon receipt of a CGT exempt small business sale proceeds contribution that falls within the relevant cap, a personal injury payment or a rollover superannuation benefit (unless it contains an untaxed element, for example, if paid from certain public sector schemes).
Amounts transferred from a foreign superannuation fund
If you are transferring an amount you hold in a foreign superannuation fund into your account, the Australian tax arrangements can depend on your residency status and when the benefits are transferred. If part of the transfer includes an amount assessable to you as ‘applicable fund earnings’, you may be able to choose to have this amount taxed in the fund instead of at your marginal rate. This amount may be excluded from the contribution caps. If you are considering transferring benefits from a foreign scheme into the Fund it is important that you seek specialist advice on both the overseas and Australian tax treatment. We suggest you speak to your adviser for more information.
Summary of tax treatment of contributions and rollovers
The information in the table below briefly describes the current tax treatment of superannuation contributions and other amounts that may be credited to your account.
| Contribution/Rollover | Total rate of tax | Tax is levied on |
|---|---|---|
| Concessional contributions | ||
| amounts up to the concessional contributions cap | 15%2 | Super Division |
| amounts greater than the concessional contributions cap | 46.5%2,3 | Super Division/Individual4 |
| Non-concessional contributions | ||
| amounts up to the non-concessional cap | 0% | Not applicable |
| amounts greater than the non-concessional cap | 46.5%3 | Individual5 |
| Rollover superannuation benefit (containing an untaxed element)1 | ||
| amount of untaxed element up to $1.045 million in 2008/2009, increasing to $1.1 million in 2009/2010 (known as the untaxed plan cap)6 | 15%2 | Super Division |
| amount of untaxed element > untaxed plan cap | 46.5%3 | Paying fund |
| Directed termination payments | ||
| taxable component up to $1 million | 15%2 | Super Division |
| taxable component > $1 million | up to 46.5%2,3,7 | Super Division/Individual4 |
1 Unless a rollover contains an untaxed element, it will generally not be taxed on entry to the fund. Prior to 1 July 2005, an additional Government tax of up to 15% (the ‘superannuation surcharge’) applied to certain contributions made by or on behalf of some individuals. This additional tax was abolished for contributions made on or after 1 July 2005. Contributions made before 1 July 2005 to which a surcharge assessment relates continue to apply and therefore a surcharge liability may be payable where an amount is rolled over to Super Plan and a surcharge assessment is issued in respect of part or all of that amount.
2 An additional tax of 31.5% is payable in the Fund if you have not given us your tax file number.
3 This rate includes the Medicare levy of 1.5%.
4 If applicable, the excess contributions tax of 31.5% may be paid from either superannuation money or personal money.
5 This tax must be paid from superannuation money.
6 Indexed with AWOTE and rounded down to the nearest $5,000.
7 Amounts of taxable component in excess of $1 million count towards your concessional contributions cap.
Part A of the Avenue Retirement Service PDS