by Jodie | Feb 21, 2011 | General, Investments, Self Managed Superannuation Funds, Superannuation
Non-Concessional Contributions
Non-concessional contributions are generally personal contributions for which you do not claim a tax deduction.
As with Concessional Contributions, there are also Non-Concessional Contributions Caps (NCCC) for each financial year. For the current 2010-11 year the NCCC amount is $150k. From 1 July 2009 the NCCC is 6x the concessional contributions cap of $25k.
This time, there is no transitional cap for non-concessional contributions, however there is a ‘bring-forward’ provision which allows persons under 65 during a financial year to bring forward 2 years’ entitlements thereby giving access to a total of 3 years worth of NCCCs .
Essentially; in 2010-11 an individual may make up to $450k of non-concessional contributions, (being 3x $150k.) The individual then cannot contribute more non-concessional contributions until after 1 July 2013.
The Government Co-contribution
In 2003 the Australian Government passed legislation regarding Non-Concessional Contributions. This was introduced as an incentive for low to middle income earners to start actively saving more for retirement. The government initially matched dollar for dollar Non-Concessional Contributions made by eligible individuals.
This amount was then increased to 150% for the 2005 – 2009 financial years. The rate has now been reduced back to 100% from the 2009-10 financial year and beyond, up to a maximum of $1k.
The government co-contribution is not subject to income tax when received by a super fund doesn’t make up assessable income of the fund. It is classified as “preserved.”
Who is eligible to contribute to Super?
Any person under 65 may contribute to super regardless of employment status.
Personal deductible and non-concessional contributions may also be made persons aged 65 – 74 provided they work at least 40 hours in a period of not more than 30 consecutive days in the year.
A person aged 75+ is not able to make personal contributions to superannuation. An employer contribution for an employee over 75 is only deductible if the employer is required to make the contribution by an industrial award.
In addition, from 1 July 2007 provisions have been introduced that require a fund to return personal contributions where a member has not provided their Tax File Number (TFN.) These provisions were brought in more effectively administer the super system, in particular – the super caps. Once a super fund is aware that it has received a personal contribution from a member for whom they have no recorded TFN, they have 30 days to return the contribution. The contribution does not have to be returned if a TFN is provided for the member within 30 days.
Summing Up!
Making contributions to superannuation isn’t always a simple thing. The contribution caps are strict and if they’re exceeded, the penalties can be severe – excess contributions tax can apply and the consequences are very expensive!
by Jodie | Feb 21, 2011 | Finances, Self Managed Superannuation Funds, Superannuation
What is a Concessional Contribution?
A Concessional Contribution is made to a complying superannuation fund which in turn, becomes part of the assessable income of the fund.
The individual (or entity) making the contribution is generally allowed to claim a tax deduction for these contributions.
What is the Concessional Contribution Cap?
Concessional Contributions made by or on behalf of an individual are subject to a cap or set limit in each financial year.
For the 2010-11 financial year the concessional contribution cap (CCC) amount for individuals under the age of 50 is $25k. The cap is indexed annually. Note that the CCCs apply to the individual, not the fund.
As an example: if Mr Jones (aged 48) made $25k in Concessional Contributions to his particular fund of choice in the 2010-2011 financial year, he is unable to contribute any additional concessional amounts to this or any other complying super fund.
Between 1 July 2007 and 30 June 2012 an increased CCC applies to individuals 50 years+ (on the last day of the financial year.) The transitional CCC for 2010-11 is $50k. This transitional cap is not indexed.
It has been proposed that from 1 July 2012 individuals aged 50+ with total super below $500k will permanently increase to $50k. This change has not yet been made law and may well be amended when passed by parliament.
What’s included in Concessional Contributions?
Included in the list of Concessional Contributions are:
– Super Guarantee Contributions made by employers
– Salary sacrifice amounts; and
– Personal deductible contributions
![Understanding Australia's Superannuation System]()
by Jodie | Feb 21, 2011 | Finances, Investments, Self Managed Superannuation Funds, Superannuation
Superannuation is the most common form of retirement savings for most Aussies.
This has been actively encouraged and promoted by the government through the introduction of the Superannuation Guarantee Charge (more commonly known as the SGC) back in July of 1992 by the Keating Administration . The introduction of this legislation forced employers to set aside a percentage most employee’s wages and pay it each quarter to a complying superannuation fund. This percentage now sits at 9% with some lobbying for an increase of up to 12%.
The purpose of superannuation is to provide private funding for an individual’s retirement; instead of having to rely on a Centrelink Pension.
You have a few choices about how to save for retirement and there’s several different ways, including:
– SGC contributions (paid by your employer)
– Salary sacrifice (putting more into your super in pre-tax dollars instead of taking it home)
– Government co-contribution (a top up from the Government subject to certain rules)
– Personal deductible contributions (mostly utilised by the self employed market)
– Non-concessional contributions (where no tax deductions apply)
Each of these contributions fits into a specific category, namely:
1. Concessional Contributions (where a tax deduction will be claimed) or
2. Non-Concessional Contributions (where no tax deduction will be claimed.)
You might remember them from previous super statements as ‘Taxable’ and ‘Non-Taxable,’ which was probably a little more self explanatory. There are very distinct differences between the two which will be discussed in more detail in coming posts…
by Jodie | Feb 10, 2011 | Finances, Investments
Following recent periods of volatility and sharemarket losses, many investors have sought a haven in defensive assets such as cash.
While cash is an important component in any diversified portfolio, it is a low-risk, low-return asset class which is unlikely to provide the growth required to help you rebuild long-term wealth. This means that it may be time for you to consider re-balancing your portfolio with higher returning, and therefore, higher risk asset classes, such as shares.
The best defence is not always what it might seem…
The are good reasons for cash reliant investors to consider why now is the time to make sure they’re following a properly diversified investment strategy. Weigh up what happens if you stay in cash… And what happens if markets do go down again…
Russell here provides 4 reasons why now may just be a good time to get back into the market. Check out the report here:
Is it Time to Get Back In?
by Jodie | Feb 10, 2011 | Finances, General, Investments
Please find below a summary for investors on what to expect in 2011 from Russell Investments’ global strategist, Andrew Pease.
The team have pooled their resources to give investors a taste of what’s ahead for the coming year.
They explore how Global forces will affect Aussie investors and where the best opportunities lie. It’s a quick read – I hope you enjoy!
Download here the: Global Outlook for 2011 with Andrew Pease of Russell Investments
Non-Concessional Contributions
