There are two types of superannuation contributions paid to a superannuation fund concessional and non-concessional contributions. Concessional contributions include employer contributions (including contributions made under a salary sacrifice arrangement) and personal contributions that are claimed as a tax deduction by a self-employed person.
The concessional contributions cap for the year ended 30 June 2013 was $25,000 regardless of the age of the taxpayer. There are currently changes to this cap for taxpayers who wishing to top up their member balances in their superannuation funds. The concessional cap will temporarily increase to $35,000 for the 2013/2014 financial year if you are aged 59 years or over on 30 June 2013. For the 2014/15 financial year or a later financial years if you are aged 49 years or over on the last day of the previous financial year the concessional contributions are also capped at $35,000.
Be aware there are penalties for exceeding these caps known as excess contributions charge. The tax that is applied to excess contributions is 31.5% in addition to the 15% contributions tax payable by your SMSF. The member is personally liable for this tax but can ask the super fund to release funds to pay it.
Non-concessional contributions include personal contributions for which you do not claim an income tax deduction. People aged under 65 years can make non-concessional contributions of $150k per year. They can contribute up to $450K (3 x $150k) in one lump sum, but are then exempt from being able to contribute any more non-concessional contributions for the next 3 years. This is known as the bring-forward option.
If you are over 65 years of age, to make any contributions into super the taxpayer must pass the work test which involves working 40 hours per week over a 30 day period in the financial year you pay the non-concessional contribution. If a member’s non-concessional contributions exceed the cap, a tax of 46.5% is levied on the excess contributions. Individual members are personally liable for this tax and must have their super fund release an amount of money equal to the tax.