Contribution caps

It’s important to note that QSuper does not monitor your contributions to ensure you don’t exceed the caps. So, to ensure you don’t exceed the concessional or non-concessional contributions caps, you should keep a record of the ongoing total of your contributions each financial year. The contributions caps apply to contributions going into all of your superannuation funds.

Additional tax will apply to concessional contributions in excess of the concessional contributions cap. The amount in excess of the cap will be taxed at 31.5% – this is in addition to the standard 15% contributions tax and any no-TFN tax that may apply. This tax will be imposed on you. You may pay the tax on your excess contributions by submitting a release authority to QSuper to withdraw an amount from your superannuation equal to the tax liability, or pay the tax from other assets. Amounts in excess of the concessional contributions cap will also count towards your non-concessional contributions cap.

If you exceed the non-concessional contributions cap, the amount in excess of the cap will be taxed at 46.5% (see table above). This additional tax is levied on you and must be paid from your superannuation savings by presenting a release authority.

The ATO will send a release authority to you if you are liable for tax on excess contributions; that is, you’ll receive a written notice authorising you to withdraw money from your superannuation fund. Release authorities can be presented to any of your superannuation funds, other than those that hold only a defined benefit interest on your behalf. You can either direct your superannuation fund to release money to you, or to pay the ATO directly.

If the notice is for tax on excess concessional contributions, the amount may be paid by you, or from your superannuation account. If you choose to pay the amount from your superannuation account, you must present your release authority to your superannuation fund within 90 days of the issue date. However, it’s important to note that while you have 90 days to present your release authority to your superannuation fund, interest may be charged if payment is made after the due date, which is 21 days from the date of your ATO notice of assessment.

If the notice is for tax on excess non-concessional contributions, the amount must be paid from your superannuation account. In this case, you have 21 days to present the release authority to your superannuation fund before further penalties may be applied by the ATO. It’s important to note that you only have 21 days to pay the required amount to the ATO, and interest may be charged if payment is made after the due date. After receiving the release authority, QSuper will generally make a payment to the ATO or the individual (whichever is nominated) within seven working days.

In defined benefit accounts, employer contributions aren’t allocated to individual members but to a pool of funds from which benefits are paid. Because of this, a formula is used to work out what’s called the notional taxed contribution (NTC), which determines the total concessional contributions to be reported for your defined benefit account and count towards your concessional contributions cap.

The formula takes into account the member’s salary for superannuation purposes, non-concessional standard contributions, and an actuarially derived new entrant contribution rate (NECR).

You can work out your NTC by using the formula and the NECR rate for your account type shown below. If you’re a defined benefit account member, the formula is the same no matter what your rate of contribution.

Special rules may apply if you were a defined benefit account member at 12 May 2009

Special arrangements will apply to members with a defined benefit style of account at 12 May 2009. These arrangements only apply to concessional contributions made to a defined benefit account, and mean if your NTC amount exceeds the cap you won’t pay any excess contributions tax, as your NTC amount is deemed to be within the cap. Legislation recently passed allows for regulations to be made which may impose conditions on these arrangements, but no details of these regulations have been released.

Remember, these special arrangements only apply to the NTC amount attributed to your defined benefit account, and not to concessional contributions to an accumulation account, such as salary sacrifice voluntary contributions, or additional employer contributions paid to meet ordinary time earnings obligations.

If you contribute to a defined benefit account for only part of the year, you need to multiply your salary by the number of days you contributed to the defined benefit account, divided by the total days in the year.

If you work part-time, you’ll need to multiply your salary by your part-time ratio. You can find out your part-time ratio by contacting your employer. If you change the number of hours you work during the financial year, your employer may not be able to tell you your part-time ratio until the end of the financial year.