After-tax contributions

01/07/2015
Provided by Mercer.

Reward your future self by making voluntary after-tax contributions into your super.

Making after-tax super contributions is simply a matter of depositing your personal money into your super.

 

What are after-tax contributions?

 
  • After-tax contributions, also known as non-concessional contributions, are made from funds on which you've already paid income tax at your marginal tax rate.
  • You won't be taxed again on these funds when you make an after-tax contribution as you've already paid tax on them: however a tax of up to 15% will apply to any earnings.
  • The 15% earnings tax is quite low when compared to investing outside of super, where your investment earnings are added to your salary and other income and taxed at your marginal rate.
  • They're different to salary sacrifice contributions which are made before your income is taxed.
 

Who can make after-tax contributions?

 
  • If you're under 65, you're eligible to make contributions to a super fund.
  • If you're between the ages of 65 and 74, you can contribute to super if you've worked at least 40 hours in a continuous 30 day period within the financial year.
 

Contribution caps

After-tax contributions are subject to limits known as contribution caps. Any contributions in excess of the caps are subject to an additional tax of 47%.

The caps for the financial year 1 July 2015 to 30 June 2016 are:

 
  • $180,000, or;
  • $540,000* over three financial years for people under age 65
 

What you should know

Excess non-concessional contributions made from 1 July 2013 can be withdrawn without penalty, along with any 'associated earnings'. Associated earnings are calculated using an assumed earnings rate equal to the 90 day bank bill rate plus 7%.

These earnings will be taxed at your marginal rate, less a 15% tax offset for tax already paid on the earnings within the fund. You should ensure you're not going to exceed the cap that applies to you prior to making an after-tax contribution.

*To accommodate larger contributions, people under the age of 65 at the start of the financial year may generally bring forward two financial years' of non-concessional contributions - meaning they can make up to $540,000 of after-tax contributions over 3 years. An eligible person who makes an after-tax contribution in excess of $180,000 in a financial year automatically triggers this bring forward provision.

This information has been prepared by Mercer Outsourcing (Australia) Pty Ltd (MOAPL) ABN 83 068 908 912, Australian Financial Services Licence #411980. Any advice contained in this document is of a general nature only, and does not take into account the personal needs and circumstances of any particular individual. Prior to acting on any information contained in this document, you need to take into account your own financial circumstances, consider the Product Disclosure Statement for any product you are considering, and seek professional advice from a licensed, or appropriately authorised financial adviser if you are unsure of what action to take. "MERCER" is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917. Copyright 2015 Mercer LLC. All rights reserved.
 

LCA Nominees Pty Ltd ABN 61 008 204 939 AFS Licence #240571, as Trustee for Lutheran Super ABN 93 371 348 387.

This website is provided by Mercer Outsourcing (Australia) Pty Ltd (MOAPL) ABN 83 068 908 912, Australian Financial Services Licence #411980. The Trustee pays a fee for the provision of this service, however this fee is not conditional on you using this service or acting on the information or advice provided through this service.