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Watch those concessional contributions - Big Sky Financial Solutions

Watch those concessional contributions



One of the changes in the 2010 Budget related to how much you can contribute to your super account before the current tax concession is removed.

If you’ve been salary sacrificing into your super since July 2010 it’s not a bad idea to check where you’re up to at this point, just to make sure you’re not going to go over the limit.

What are concessional contributions?



Money going into your super is either a ‘concessional’ or a ‘non-concessional’ contribution. If it’s concessional it means you only pay 15% tax, a ‘concession’ to the tax rate you generally pay on most other things, e.g. your salary.

Concessional contributions include the (minimum) 9% compulsory super paid by your employer, as well as any salary sacrifice contributions you might be making. For the 2010 financial year, changes now mean that there is a reduced annual limit on your concessional contributions down by half, to $25,000 pa*.

There are, however, transitional rules for people aged 50 or over (or turning 50) where the rules allow you to make concessional contributions up to $50,000 pa until 30 June 2012.

What happens if I’m over?



If you exceed the limit, or cap, for your age group you’ll pay more tax. Contributions in excess of the concessional cap are taxed (currently) at 31.5*%, in addition to the standard 15% contributions tax. This includes the 1.5% Medicare Levy.

Not sure what to do?



If you’d like some assistance with understanding how the new limit may affect you – either for this financial year or for subsequent years – please contact Big Sky Financial Solutions, on 1300 700 189. It’s not just about keeping an eye on your tax; this can also affect your longer term retirement planning.

*For 2009/10 but indexed to average weekly ordinary time earnings (increased in $5,000 increments) for future years

This communication contains general advice only and has not considered any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (express or implied) or other information should be acted on without obtaining specific advice from a qualified professional. Big Sky Financial Solutions Pty Ltd (ABN 95 133 452 589) is a corporate authorised representative (CAR 331 478) of Outlook Financial Solutions Pty Ltd. (ABN 40 083 233 925 Australian Financial Services Licence Number 240959).

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