Max yearly contribution to Super?

Hi there,

Is there any maximum amount one can contribute to Super on a yearly bases?. If one so chose, can one contribute the whole yearly wages?

Thanks,

artgul

 

I assume you mean employer contributions by salary sacrifice ?

There are limits on both 'deductible contributions' by your employer on which they can claim a tax deduction and a limit on your personal after-tax contributions.

Penalties may kick in if you exceed these limits.

There are also transitional rules if you are over 50, and fancy arrangements are possible using a pension while still working if 55+.

If you salary sacrifice, this amount may still be counted for such things as Centrelink benefits, so it does not totally disappear from the radar.

Reducing your salary may also allow your employer to weasel out of paying other benefits such as their SGC requirements, sick leave, and there may be termination, workcover and industrial award issues. Not to mention the fact that your money is tied up for the long term.

Having said that, salary sacrifice into super is a VERY tax-effective strategy and should be seriously considered. It is very generous and I don't want to put you off a great opportunity.

Note also that salary sacrifice could also be used for other purposes.

You need to get advice specific to your situation - and you need to do it well before entering any arrangement with your employer. Make sure this is independent advice and not from your employer or employer sponsored fund.

Sorry... can't elaborate on specifics, but you can see there is a bit of planning involved to maximise benefits while avoiding pitfalls. Hence an Accountant or Financial Advisor will need to charge for his time. It is unlikely that his fees will be tax deductible either !

Cheers,

Rob

(As usual, don't use this as a recommendation to do or refrain from doing anything. Also do not use as a substitute for specific advice appropriate to your situation ! - am I getting better at these disclaimers ? )

 

Hi Rob,

>I assume you mean employer contributions by salary sacrifice ?

Yes, this is what I mean. Thus, what's the maximum legally allowed for some one much younger than 55?.

Thank you,
artgul

 

**Generally** (and you should check this for your case) under 50 years old, 'deductible' contributions made by your employer to a complying super fund is limited to $50,000.

I believe this limit includes you employer's SGC liability.

I also believe that if it is exceeded, then your employer cannot claim deductions for the excess, whilst this excess is taxed at 46.5% to the fund (or you) and the residual adds to your 'non-concessional' limit. If this tips you over that limit as well then another 46.5% tax is payable giving a grand total of ***93% effective tax rate **** !!!!!!

I think you get the message to be careful about exceeding the limits.

Why such draconian penalties on contributing too much ? I can only guess that the politicians and civil servants that dreamt this one up don't care as they are on a very generous non-contributing Commonwealth (taxpayer funded) scheme.

Cheers,

Rob

(I don't think any disclaimer in the footnotes can save me from that last paragraph ! But check it is true as I still cannot believe it myself. Who said "hooray for abolition of RBLs" ?)

 

Hi Rob, thank you for your prompts and thorough reponses.

Rgds,
artgul

 

artgul

Its quite possible for someone with two employers on either a high income or where they salary sacrfice into super for the combined contributions of both to exceed the $50,000 limitation. Where this happens the employers will still be able to claim the deduction, but your fund will tax the excess an extra 31.5%, ie total tax of 46.5%.

 

Hi MattR. Did you receive my PM yesterday?