Accounting, Taxation, Audit, Self Managed Super Funds, Goodwin Chivas & Co, Baulkham Hills, NSW, Australia
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April 2012 Newsletter-Super Contributions: What are the rules?

Super Contributions: What are the rules?

Over the next few months we will feature a series of articles about contributing to superannuation and the rules associated with contributions. This month we cover the main types of contributions.

As superannuation offers extremely valuable and generous tax concessions, it is not surprising that there are rules limiting how much can be contributed. Unfortunately those rules can sometimes be complex as there are restrictions on:


  • who can contribute and when; as well as
  • how much can be contributed without significant additional taxes or other consequences.

In this article we explain the various rules and how they interact. This explanation applies specifically to self managed funds but the same basic rules are generally applicable to most private (non-Government) superannuation funds.

Not all contributions are created equal
Perhaps the most important starting point here is that there are a number of different types of superannuation contributions. The two most common types are:


  • Contributions individuals make themselves from their after tax income or personal savings etc. for which they do not claim a tax deduction. These are often called "non-concessional contributions" because they do not receive any special tax concessions when they go into superannuation (they are not tax deductible to the contributor, nor are they taxed in the fund);


  • Contributions for which a tax deduction is claimed are usually called "concessional contributions". Normally these are, for example, contributions made by an employer, "salary sacrifice" contributions or personal contributions for which a tax deduction is claimed. (The circumstances under which an individual can claim a tax deduction for their superannuation contributions is discussed later in this series.)


Just to complicate matters there are also some other types:


  • Spouse contributions are contributions made by an individual on behalf of his or her spouse. These are really just a special type of non-concessional contribution and are subject to the same limits and rules as all other non-concessional contributions;


  • Co-contributions made by the Commonwealth Government when people meeting certain conditions make their own non-concessional contributions. From 1 July 2012 there will be a second special Government contribution called a low income super contribution. This will be made under different conditions and will therefore affect different people to the co-contribution but conceptually both are the same - amounts added to an individual's superannuation by the Government. These contributions are not classed as either concessional nor non-concessional contributions, however like non-concessional contributions, they are not tax deductible to the contributor, nor are they taxed in the fund;


  • Mandated contributions are not really a different type of contribution at all. They are just the name given to taxable contributions made compulsorily by an employer under an award or legislation (eg. employers are normally required to contribute 9% of salary for all their employees). They are effectively a special type of concessional contribution.


The rules governing when each of these contributions can be received by any superannuation fund (including a self managed fund) are all slightly different but they do have one thing in common – they are linked to the age and/or work status of the person for whom they are made.

>> Read the May newsletter article on the different rules for contributions for people aged under 65 and over 65.

In the meantime, if you have any questions please contact us.

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