There are limits on how much you are able to contribute to your super fund each financial year, without having to pay extra tax. These limits are known as ‘contribution caps’.
How much you can contribute to your super fund, and whether or not your fund is allowed to accept your contribution may also depend on your age and total overall super balance.
Contribution caps apply to all super funds. If you have more than one super fund, all of your contributions are added up and count towards your caps.
If you exceed these caps, you may need to pay extra tax. You can avoid this by becoming familiar with what your own contribution caps are, and what may apply to you.
Understanding The Types Of Contributions
There are two types of contributions you (or others) can make into your super fund:
- Concessional – These contributions come from income that has not yet been taxed. They are also called ‘before tax’ contributions. Once the concessional contributions are in your super fund, they are taxed at a rate of 15%. You may need to pay extra tax if you exceed the concessional contributions cap.
- Non-concessional – These contributions come from income that has already been taxed. They are also called ‘after tax’ contributions. These contributions are not taxed once they are received by your super fund. However, you may need to pay tax on them if you exceed your non-concessional contributions cap.
To find out more about the contributions in the super fund, please give us a call on 043 236 690 or book a free 15 min appointment here.