Contribution caps for SMSFs

SMSF contribution caps limit the amount that can be contributed for a member within a single financial year. The government indexes these caps annually. A member of an SMSF whose total contributions in a single financial year exceed the allowable contribution cap may be liable for additional tax on excess contributions.

Fund-capped contributions limit for SMSFs

A SMSF can’t accept single contributions that exceed the member’s fund-capped contribution limit. The fund-capped contributions limit depends on the age of the member at the beginning of the financial year:

  • Member aged 65 or over but under 75 on 1 July
    For members within this age bracket, the fund-capped contribution limit is the same as the non-concessional contributions cap for the financial year.
  • Member aged 64 or under on 1 July
    For members within this age bracket, the fund-capped contribution limit is three times the amount of the non-concessional contributions cap for the financial year.

What don’t SMSF fund-capped contributions include:

  • contributions that a member intends to claim as an income tax deduction.
  • contributions from a structured settlement or personal injury payment.
  • amounts that the SMSF member gives a valid election to exclude from the non-concessional contributions because it qualifies for the super capital gains tax (CGT) cap
  • amounts that relate to a directed termination payment.
  • superannuations co-contributions.

If there have been excess amounts contributed, the SMSF fund must return the excess amount within 30 days.

Concessional contributions

Concessional contributions are contributions made into an SMSF that are included in the SMSFs assessable income. These contributions are taxed at the concessional tax rate of 15%. This 15% tax is often referred to as the contributions tax.

Common types of concessional contributions include employer contributions, such as super guarantee and salary sacrifice contributions. Concessional contributions include personal contributions made by a member where they claim an income tax deduction. Concessional contributions are also subject to an annual cap (see details of the contribution caps below).

From 1 July 2017, the general concessional contributions cap is $25,000 for individuals regardless of age. For the 2014 financial year onwards, excess concessional contributions are not subject to excess contributions tax. If the contributions exceed the cap, the excess amount will be included in the member’s assessable income and taxed at the marginal tax rate.

Carry forward concessional contributions can be made from 1 July 2018. If a member has a total superannuation balance less than $500,000. Members can access unused concessional contributions caps on a rolling basis for 5 years. These carried forward amounts that have not been used will expire after 5 years. The first year in which unused concessional contributions can be accessed is the 2020 financial year.

Non-concessional contributions

Non-concessional contributions are contributions made into an SMSF and not included in the SMSFs assessable income. The most common type non-concessional contribution are personal contributions made by a member where no income tax deduction is claimed.

Non-concessional contributions also include excess concessional contributions within a financial year. They don’t include co-contributions, structured settlements and orders for personal injury or capital gains tax related payments that a member has elected to exclude from non-concessional contributions.

From 1 July 2017, the non-concessional contributions cap is reduced to $100,000 for members 65 or over but under 75. Members under 65 years of age will have the option of contributing up to $300,000 over a 3 year period for members depending on their total superannuation balance.

If you would like more information about the contribution and bring forward available to members under 65 please contact us. B.I.T. Accountants are a highly regarded market leader, providing a high quality, professional and timely superannuation audit service to clients Australia wide. Whether you are an individual or a practice needing to service clients who require SMSF auditing, B.I.T. Accountants can help. Contact us today for more information.

DISCLAIMER: The above is general advice only, you should not act on this advice without consulting a professional adviser to discuss your personal circumstances.