Concessional (or deductible) contributions caps

A ‘concessional contribution’ is basically a super contribution which is assessable in the fund. Generally speaking, contributors can claim tax deductions, including an employer contribution and a self-employed contribution.

Concessional contributions cap in 2012-13 financial year is $25,000. Exceed the $25,000 cap remain tax deductible, however are taxed at an overall effective rate of 45.5%

Non-concessional (or uneducated) contributions caps

‘Non-concessional contributions’ are not deductible contributions, made by an person from after-tax income. A person who is under 65 years of age at any time during an income year can contribute $150,000 or can bring forward their $150,000 contributions cap for the following two years, this effectively allows a person who is under 65 years to contribute up to $450,000 in one income year. This cap is at $450,000 over a 3-year period.

Non-concessional contributions in excess of the $150,000 or $450,000 limit (under the 3-year rules) are generally subject to tax at the rate of 45.5%.

Contribution made by an individual from the disposal of an active asset

Under small business CGT concession, an individual can generally choose, under capital gains tax cap amount, to exclude from the non-concessional contributions cap.

A non-concessional contribution for part or all of the capital proceeds from the disposal of a CGT asset that qualifies for the 15-year exemption or up to a life time limit of $500,000 under the retirement exemption.

The notice must be provided to their fund in approved form, indicating how much of a contribution relating to the contribution made by an individual from the disposal of an active asset before the time the contribution is made.