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Pre-tax contribution cap has lowered to $25,000

What’s changed

The maximum amount you’ll be able contribute to super annually from your pre-tax income will be $25,000. The current rate is $30,000 for people under 50 and $35,000 for people 50 or older. This total includes all mandatory employer contributions, salary sacrifice and personal contributions for which you claim a tax deduction.

What it means to you

If you put more than $25,000 into super in a year, you’ll start paying your marginal tax rate on any other amounts you contribute (not the 15% concessional tax rate), plus an interest penalty.

After-tax contribution cap has lowered to $100,000

What’s changed

Currently you can contribute up to $180,000 in after-tax money to your super per year. This will drop to $100,000 and will only be an option if you have less than $1.6 million in super.

What it means to you

If you’re putting your after-tax income into super, the maximum amount you can contribute in this way each year has dropped by $80,000.

If you’re under 65 at the start of the financial year the amount you can contribute depends on your super balance: if your balance is less than $1.4 million, you can contribute up to three years’ worth of the cap at once; if your balance is between $1.4 million and $1.5 million, you can contribute up to two years’ worth of the cap; if your balance is between $1.5 million and $1.6 million you are limited to just one year’s worth of cap.

Claiming personal contributions as a tax deduction

What’s changed

You’ll be able to claim up to $25,000 in personal super contributions (those you make from your after-tax income) as a tax deduction. If you’re aged between 67 and 74 you’ll have to pass a work test to claim the deduction. This isn’t available for contributions to untaxed funds and Commonwealth public sector defined benefit funds.

What it means to you

This makes personal contributions much more attractive, as the more you contribute the less tax you’ll pay. Remember though that these contributions will count towards your $25,000 concessional contributions cap, so keep an eye on your total of these personal contributions, as well as employer and salary sacrifice contributions.

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