Too Much Super

By Author: Ronald Havens
Total Articles: 9
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As the end of financial year approaches, superannuation issues are some of the most important considerations that tax payers should be aware of. One such issue is the danger of super contributions exceeding the contributions cap. If the contributions exceed the cap, then it is possible to pay almost 93 per cent tax on a super contribution in penalty for the breach.

To avoid being penalised, keep in mind that there are only a limited number of contributions that can be elected not to count towards the non-concessional contributions cap. These include contributions arising from personal injury payments and the proceeds from certain small business assets. There are a number of circumstances that should raise alarm bells:

Keep track of when an employer makes a superannuation guarantee payment. If they make it in July instead of June, this could force up the contribution.

The same applies to contributions which are made before June, but aren’t processed until July or later. This can increase a contribution unbeknownst to the taxpayer.

If a taxpayer has multiple jobs, then it is possible that the superannuation ...
... guarantees by each employer can push them over the edge and make them qualify for the excess contributions tax.

The limit for concessional tax deductible contributions is very low, and so many people are being pushed inadvertently over the limit. Make sure to consult a professional and find out whether circumstances warrant asking the Commissioner to reconsider the excess contribution assessment.

This article is for guidance only, and professional advice should be obtained before acting on any advice herein. Neither the publisher Leenane Templeton The Self Managed Super Specialists nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication. See "Self managed super funds" website for further information. This article relates to Australia, NSW and does not take into account any legislative or other changes made after 1 April 2011.Visit the SMSFs website for more information.