Matthew Richardson, SMSF manager for Accurium, said on a recent webinar that there are a number of elements which may impact both concessional and non-concessional caps.
“The current caps in place are $30,000 for concessional caps and $120,000 for non-concessional caps,” Richardson said.
“There are also things to think about such as the member’s total super balance, the bring-forward rule for non-concessional contributions, the carry-forward rule for concessional caps and other types of contributions that a member will need to think about to make sure they are contributing the right amount and not exceed their cap.”
The ideal situation, Richardson said, is that a member can make a personal contribution and then claim a deduction against their concessional cap.
“The fund’s assessable income is taxed at 15 per cent. The cap is $30,000 for this year, and those concessional contributions can be made up of a number of different things that will count towards that cap,” he said.
“One of those is the super guarantee, as well as a salary sacrifice. But there may also be additional salary sacrifices, other employer payments and again personal deductible contributions. These are things of which we need to be aware of if the member wants to make a contribution and then claim an amount as a deduction.”
He added that it is also important to know what other money has gone in to the fund as a concessional contribution to ensure the member does not claim too much deduction and to make sure they do not exceed their contribution cap which would then effectively “make that excess amount useless”.
“They’re not getting any advantage from that. They’re just exceeding the cap and then having to respond to the ATO to decide what they want to do there,” Richardson said.
“With the super guarantee payment now up to 12 per cent, for some people it will actually give them less availability to claim those deductions for personal contributions.”
He continued that if there is an excess amount for which a member is claiming a deduction it “nets itself out” from a tax point of view, so there’s no advantage.
“But even if they claim the right amount within their concessional cap, there is still the question about whether it is the right choice, whether that member wants to claim a personal deduction on those contributions, and what that means for the fund,” he said.
“Basically, you’re taking what would be a concessional contribution made from a contribution, made from after-tax money, and you are changing into a concessional contribution in the fund.
“That’s now part of the fund’s assessable income and it is paying 15 per cent tax on that amount, and the member personally will get a deduction for that value, which sounds like a good thing, but you’re essentially shifting that income from the personal side to the super side.”
