Superannuation is a way to save for your retirement. The intent is to support you to have sufficient income in retirement so that you can live comfortably once you stop working and earning an income.
The money invested via superannuation comes from contributions made into your super fund by your employer and, ideally, topped up by your own money. In addition to that, sometimes the government will add to it through co-contributions or the low income super contribution.
Concessional Contributions
Concessional contributions are before-tax contributions that can include employer contributions, contributions made under a salary sacrifice arrangement and tax-deductible contributions by an individual.
You, or your employer, generally receive some type of tax advantage when a concessional contribution is made to a super fund. Currently, they’re taxed at 15% when they enter your super fund, unless your income is over $300,000 (including concessional contributions), in which case some or all are taxed at 30%.
More specifically, quoting directly from the ATO website:
Types of concessional (before-tax) contributions include:
- employer contributions, such as
- compulsory employer contributions paid by your employer
- any additional pre-tax super contributions your employer makes
- salary sacrifice payments made to your super fund
- other amounts paid by your employer from your pre-tax income to your super fund, such as administration fees and insurance premiums
- contributions that you are allowed as an income tax deduction, such as contributions you make if you are self-employed
- notional taxed contributions if you are a member of a defined benefit fund
- some amounts allocated from a fund reserve.
If you’re aged 48 years or younger on the 30 June 2014, you can contribute up to $30,000 a year in concessional contributions for the 2015/2016 year. Refer table below.
If you’re aged 49 years or older on the 30 June 2014, then you can contribute up to $35,000 a year in concessional contributions for the 2015/2016 year.
| Table 1: Concessional contributions general cap | |
| Income year | Amount of general cap |
| 2015-16 | $30,000 |
| 2014–15 | $30,000 |
| 2013–14 | $25,000 |
Your Adviser can assist with getting you financially ready for retirement. To find out whether you have appropriate superannuation structures in place, why not schedule a meeting with your financial adviser now?
Disclaimer
Information current as at 9 July 2015
The advice is general in nature only and does not take into consideration your financial situation, goals or needs. Before making any investment decision you should consider the appropriateness of the information to your circumstances and obtain a copy and read the Product Disclosure Statement. Please seek expert advice prior to acting on this information.