Contributing to Super factsheet

Contributing
to Super
Fact sheet
Making extra contributions to your super account may help you to reach your
retirement goals. Generally contributing to super is a tax-effective way to save for
your future due to tax concessions provided by the government. Contributions are
generally categorised as either concessional or non-concessional.
Concessional contributions
(or before-tax contributions)
Concessional contributions are before-tax contributions,
which include the compulsory super guarantee (SG)
contributions your employer makes for you, other employer
contributions above the SG and any voluntary salary sacrifice
payments that your employer makes on your behalf.
Your super fund will withhold tax at the concessional rate of
15% on your concessional contributions. An additional 15% will
effectively apply on some or all of your contributions if your
income (including your concessional contributions) is more
than $300,000 per annum.
For members in defined benefit funds, a notional concessional
contribution is calculated and reported to the Australian
Taxation Office (ATO).
Superannuation Guarantee (SG) contributions
If you are eligible your employer is required by law to make
contributions into your super. The amount payable in the
2015–16 year is 9.5% of your ordinary time earnings# up to
a limit†. The SG contribution rate will remain at 9.5% until
30 June 2021.
Salary sacrifice into super
Salary sacrifice is an arrangement with your employer where
you make extra contributions from your pre-tax salary into
your super account, rather than receiving it as take-home pay.
Salary sacrificing into your super helps you save on tax today
and build wealth for tomorrow by:
• increasing your super savings
• reducing your assessable income, which reduces the amount
of income tax you pay
• taxing the salary sacrifice contributions at only 15%
(or potentially 30% for higher income earners as
indicated above), instead of your marginal tax rate
(up to 49%~).
Concessional contribution caps
There are caps applied to concessional contributions. The caps
are the limits on the amount of concessional contributions
you can make before you are required to pay extra tax. The
following table shows the current and future caps.
General Cap
Higher Cap
(people age
60 and over
in the year)
Higher Cap
(people age
50 and over
in the year)
2014–15
$30,000
$35,000
$35,000
2015–16
$30,000
$35,000
$35,000
Financial
Years
If you go over the concessional contributions cap
If you exceed the concessional contribution cap the excess
amount will count towards your non-concessional contribution
cap. Any excess concessional contributions will be included in
your assessable income for the corresponding year and taxed
at your marginal tax rate. You will also be liable for the excess
concessional contributions (ECC) charge.
The ECC charge is applied to recognise that the tax on excess
concessional contributions is collected later than normal income
tax. The charge is payable on the increase in your tax liability for
the year you have excess concessional contributions. Further
charges may also be applied by the ATO if you do not pay the
ECC by the due date.
To reduce your tax liability, the ATO will apply a 15% tax offset
to account for the contributions tax that has already been paid
by your super fund.
You may elect to withdraw up to 85% of your excess
concessional contributions from your super fund to help pay
your income tax assessment when you have excess concessional
contributions. Any excess concessional contributions withdrawn
from your fund to reduce your tax liability will no longer count
towards your non-concessional contributions cap.
Non-concessional contributions
(or after-tax contributions)
Non-concessional contributions (NCC) are generally
the after-tax contributions you make to a super fund. They
include personal contributions you make from your after-tax
pay, spouse contributions and any concessional contribution
that exceeds the concessional contribution cap. If you
exceed your NCC cap, a tax of 49% is applied to the excess.
The bring forward option is automatically triggered as soon
as you contribute more than the NCC cap for a particular
year. Therefore, if you bring forward your NCC in the 2015–16
financial year, the amount of NCC you can contribute in the
first year will be $540,000 (3 x $180,000). However if you do
this, you will not be able to make any more NCC for the next
two years.
Some things you need to consider
Personal contributions
Making extra contributions from your after-tax pay is one
way of helping your super grow. It doesn’t need to be a lot;
just a few dollars from each pay can potentially make a real
difference in retirement. If you make personal contributions
you may be eligible for the government co-contribution. For
more information about the co-contribution and eligibility,
visit www.rest.com.au/co-cont
Make sure we have your tax file number
While it’s not compulsory, it’s a good idea to give us your tax
file number (TFN). Without it, any before-tax contributions
will be taxed at a higher rate and we won’t be able to accept
any personal after-tax contributions.
If you are self-employed and satisfy eligibility conditions
you may be able to claim a tax deduction on your personal
contributions. If you do claim a tax deduction the amount that
is claimed will be counted as concessional contributions.
Know your limits
It’s your responsibility to keep track of your contributions.
REST is not able to warn you if you are approaching or have
exceeded a contribution cap, so it’s important that you check
your contribution totals throughout the year. You can do this
by logging into your account details on MemberAccess at
www.rest.com.au
Spouse contributions
Your spouse can help you save for retirement by making
contributions on your behalf. If you are not earning an income,
or if your assessable income, including total reportable fringe
benefits amounts and reportable employer super contributions
is less than $13,800 per financial year, your spouse may also be
able to receive an 18% income tax offset for contributions up to
$3,000 per financial year up to a maximum tax offset of $540
per financial year.
To provide your TFN to REST, simply login to MemberAccess
at www.rest.com.au or call 1300 300 778.
Which type of contribution suits you?
Knowing which type of contribution to make or even
if it’s appropriate for you to make extra contributions
will depend on your circumstances. Our contributions
calculator at www.rest.com.au/contributions-calculator
may assist your decision.
To arrange a spouse contribution into your REST account,
download a ‘Spouse contribution payment’ form at
www.rest.com.au/forms-publications
A financial adviser can also help explain options to suit
your situation to help you make confident decisions about
your super.
What limits apply to NCC?
NCC are capped at $180,000 for the 2015–16 financial year
before additional tax applies. Any NCC above the cap will be
taxed at 49%~.
To help you get the advice you need to make informed
decisions about your super, we will pay for your first single
super-related question, as permitted by super laws, over
the phone with a Money Solutions* Money Coach.
If you are under 64 years old or younger on 1 July of the
financial year, and make NCC’s you may be able to bring
forward two years’ worth of NCC. This is known as the ‘bring
forward’ option. The cap for the bring forward option is
calculated by multiplying the NCC cap of the first year
by three.
We’re here to help
Call us on 1300 300 778 or visit www.rest.com.au/grow
to get started with making super contributions. You can
also explore options with our online calculators at
www.rest.com.au/calculators
Give your super a boost by making extra contributions
rest.com.au/grow
1300 300 778 (Monday to Friday, 8am–8pm)
#
Ordinary time earnings are generally what employees earn for ordinary hours of work, including over-award payments, commissions, shift-loading, allowances and bonuses.
~ This includes 2% for the Medicare Levy and 2% for the Temporary Budget Repair Levy.
†
The limit is known as the maximum super contribution base which is the maximum limit on any individual employee’s earnings base for each quarter of any
financial year. This limit is indexed annually. The amounts are available from www.rest.com.au/facts
*
Money Solutions Pty Ltd AFSL 258145. Money Solutions personnel are not representatives of the REST Trustee. Any financial product advice given by
Money Solutions is provided under the Money Solutions AFSL. The Trustee does not accept liability for any loss or damage incurred by any person as a
result of using products or services provided by Money Solutions.
Issue date: June 2015. This information doesn’t take into account your circumstances. So, before acting on it, you should consider whether it is appropriate
for you. Before making any decision about your super, please read our Product Disclosure Statement at www.rest.com.au or call 1300 300 778. REST
has no relationships that might influence our advice to you. REST does not pay or receive commissions. This information is provided by Retail Employees
Superannuation Pty Ltd ABN 39 001 987 739 as trustee of REST (Retail Employees Superannuation Trust ABN 62 653 671 394).
737.5 06/15 ISS6