SMSF Contributions
Employer contributions (Mandated)
Personal Contributions
Salary sacrifice contributions
Calculating your super co-contribution
Low income super contribution (LISC)
Employer contributions (Mandated)
Employer contributions are those made by an employer under a law or an industrial agreement for the benefit of a fund member. They include super guarantee contributions.
You can accept mandated employer contributions for members at any time, regardless of their age or the number of hours they’re working at that time.
Personal-contributions (Non-mandated)
- contributions made by employers over and above their super guarantee or award obligations
- member contributions – these are contributions made by, or on behalf of, a member (excluding employer contributions).
Whether you can accept a non-mandated contribution depends on the member’s age and circumstances. For example, for members under 65 years old, you can generally accept all types of contributions (subject to the relevant contribution caps), but for members 75 and over you cannot accept any non-mandated contributions.
For members who are 65 and over, non-mandated contributions can only be accepted if the member is gainfully employed for at least 40 hours in period of 30 consecutive days in each financial year in which the contributions are made. Unpaid work does not meet the definition of ‘gainfully employed’.
For some types of contributions, you can only accept the contribution if the member has given you their tax file number (TFN).
Salary sacrifice contributions
Salary sacrifice contributions are when you and your employer make a valid agreement to pay some of your future before-tax (gross) salary or wages into your super.
If you want to make salary sacrifice contributions, talk to your employer about it first to make sure they allow it and you know what the benefits will be to you – for example:
- salary sacrifice reduces your assessable income
- super contributions are taxed in your super fund at 15%, which is usually less than you would pay if you took the money as salary (but remember caps apply to super contributions – any super contributed over a cap amount is subject to extra tax).
If you choose to salary sacrifice contributions, your employer is entitled to make super guarantee contributions based on your new reduced salary. The sacrificed contributions will count towards the employer’s super guarantee obligation. If you want your employer to pay super on the original total salary, you should obtain their agreement in writing.
Salary sacrifice contributions count towards your concessional contributions cap.
Extra super contributions your employer makes for you under a salary sacrifice arrangement are reportable employer super contributions.
Super co-contributions
If you are eligible for a super co-contribution, the government will match your personal super contributions up to a maximum amount.
You don’t need to apply for the super co-contribution. If you’re eligible, all you need to do is make personal super contributions and lodge an income tax return. We work out:
- whether or not you are eligible
- your super co-contribution according to your income
Eligibility
The ATO use the information on your income tax return and the contributions information they receive from your super fund or retirement savings account to work out whether you’re eligible. If you are, they will automatically calculate the co-contribution amount and deposit it into your super account.
You are eligible for a super co-contribution if
- you made an eligible personal super contribution in the income year
- your total income (which includes reportable employer super contributions) was less than the higher income threshold for that year
- 10% or more of your total income was from eligible employment, running a business or a combination of both
- you were less than 71 years old at the end of the income year
- you did not hold an eligible temporary resident visa at any time during the year (unless you were a New Zealand citizen or the holder of a prescribed visa)
- you lodged your income tax return for the relevant income year.
Calculating your super co-contribution
Your maximum super co-contribution depends on your income. If your income is equal to or less than the lower income threshold ($33,516 for the 2013-14 income year) you can get a co-contribution of up to the full ‘maximum entitlement’. For every dollar that you earn above the lower income threshold, your maximum entitlement is reduced by 3.333 cents. You cannot get a super co-contribution if your income is at or above the higher income threshold.
The amount of your super co-contribution depends on the amount of non-concessional (after-tax) contributions you put into super and the ‘matching rate’ for the financial year you made the contribution.
| Year | Matching rate | Maximum entitlement | Lower income threshold | Higher income threshold |
|---|---|---|---|---|
| 2014-15 | 50% | $500 | $34,488 | $49,488 |
| 2013-14 | 50% | $500 | $33,516 | $48,516 |
| 2012-13 | 50% | $500 | $31,920 | $46,920 |
Low income super contribution (LISC)
The low income super contribution (LISC) is a government payment to help low income earners save for their retirement.
The LISC started from 1 July 2012 , your LISC is 15% of the concessional (before tax) super contributions you or your employer make. The maximum payment you can receive for the financial year is $500 and the minimum is $10 (however, if you are eligible for less than $10, we will round this up to $10).
You are eligible for a LISC if:
- you have concessional contributions for the year made to a complying super fund
- you are not a holder of a temporary resident visa (New Zealand citizens in Australia do not hold temporary resident visas and are therefore eligible for the payment)
- if you lodge an income tax return, 10% or more of your total income comes from business or employment and your actual adjusted taxable income does not exceed $37,000
- if you do not lodge an income tax return, 10% or more of your total income comes from employment and your adjusted taxable income estimated by us does not exceed $37,000
The payment of LISC has been maintained in respect of concessional contributions made up to and including 30 June 2016. Payment of LISC will cease in respect of concessional contributions made on or after 1 July 2017. This will mean that while LISC will continue to be payable in respect of concessional contributions made up to and including the 2016-17 income year, determinations of LISC will cease at 1 July 2019.
Eligible spouse contributions
You can add to your spouse’s super if your spouse is:
- under 65 years of age, or
- under 70 years of age and has been in paid work for at least 40 hours over 30 consecutive days during the financial year in which you want to make the contribution for your spouse.
In some circumstances you may be able to claim an income tax rebate for any spouse contributions you make. The rebate is 18% of the contribution maximum contribution $3000 ($540 rebate).
Eligibility
You may be entitled to a maximum tax offset of up to $540 each financial year if:
- you did not claim a tax deduction for the contributions
- both you and your spouse were Australian residents when the contributions were made
- at the time of making the contributions you and your spouse were not living separately and apart on a permanent basis
- the sum of your spouse’s assessable income, including total reportable fringe benefits amounts and reportable employer super contributions (RESC) for the financial year, was less than $13,800
- the contribution was made to a super fund which was a complying fund in the income year in which you made the contribution.
Same-sex partners can now have their relationship recognised by their super fund. For more information, refer to Super for same-sex couples and their children (individuals)
In specie contributions
In specie contributions are contributions to your fund in the form of an asset, rather than money or cash.
Generally, you must not intentionally acquire assets (including in specie contributions) from related parties of your fund. However, there are some significant exceptions to this rule, including:
- listed shares and securities
- business real property (land and buildings used wholly and exclusively in a business).
Your Contribution Caps
| Concessional (general cap) | Non-concessional cap | |
|---|---|---|
| 2015-16* | $30,000** | $180,000 |
| 2014-15* | $30,000** | $180,000 |
| Tax on amounts over the cap | Included in your income tax return and taxed at your marginal rates. | 46.5%*** |
| Concessional (general cap) | Non-concessional cap | |
| 2013-14 | $25,000** | $150,000 |
| 2012-13 | $25,000** | $150,000 |
| Tax on amounts over the cap | 31.5% | 46.5% |
* For the 2015-16 financial year, the concessional cap for individuals who are 49 years old or over on 30 June 2014 is $35,000. For the 2014-15 financial year, the concessional cap for individuals who are 49 years old or over on 30 June 2014 is $35,000.
** There is 15% tax payable by your fund on concessional (before-tax) contributions paid into a super fund. Your super fund usually reduces your super account by your share of this tax.
*** From 1 July 2014 the tax rate applicable to excess super contributions will increase in line with the changes to the Medicare levy. For the 2014-15 financial year, the applicable tax on excess non-concessional contributions will be 47%.
From 1 July 2014, the general concessional (before-tax) contributions cap will be indexed in line with average weekly ordinary time earnings (AWOTE), in increments of $5,000.