Super! Contributions cap increased in 2015

30 Dec , 2014  

Lisa Scott
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Lisa Scott

Financial Planner at Bridges Financial Services
Lisa is an experienced financial planner with 5+ years helping SMSF's, investors and ordinary Aussies in Sydney take care of their money matters. When she is not changing lives she is a passionate singer and song writer.
Lisa Scott
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Do you want to contribute more to super?

Well, now you can! For the first time in five years, for people under 50, the caps that regulate the amount you can contribute to super (on a concessionally taxed basis) has increased. That is, if you are under 50 from 1 July 2014, you can contribute $30,000 a year to your super (up from $25,000). If you are 50 or over during 2014/15, you will be able to contribute up to $35,000 a year (up from $25,000).

So if you’re worried that your super guarantee (SG) contributions alone may not afford you the lifestyle you want in retirement, then why not start contributing more to your super? As highlighted, depending on your age, you can contribute up to $10,000 more a year. Remember, your concessional contributions include both SG and salary sacrifice contributions, and are taxed at the concessional rate of just 15 per cent compared to your marginal rate.

Note: if you earn more than $300,000 in taxable income, then you may be subject to an additional 15 per cent tax on certain superannuation contributions.

Summary-concessional contribution caps

Screen Shot 2014-12-30 at 1.36.22 pm


Case study – how Ann and Bob reap the benefits

Let’s have a look at how the new contribution limits helped Ann and Bob save for their retirement.

Over the last five years, Ann (aged 40) and Bob (aged 50) have both been maximising their concessional contributions and contributing $25,000 (via both SG and salary sacrifice strategies) into their respective super funds.

Under the new rules, Ann can now contribute and extra $5,000 to her super each year and Bob can contribute an extra $10,000 to his super each year.

The following table shows the difference these additional contributions (non-indexed over 15 years) would make to their retirement nest egg.

Screen Shot 2014-12-30 at 1.36.35 pm

*Assumes super earning rate of 6 per cent per annum, no fees and client is not classed as a high income earner with taxable income greater than $300,000.

As you can see, it’s a substantial amount – $92,400 for Ann and $184,804 for Bob.

There’s also another opportunity to contribute more to super. As the ‘non-concessional’ contribution cap is set at six times the standard concessional contribution cap, from 1 July 2014, this cap has also increased – up to $180,000 per year. And, if you’re aged 64 or younger, you may be eligible to bring forward the next two years of non-concessional contributions in 2014/15-increasing the cap to $540k.

Non-concessional contributions are after-tax contributions and include personal contributions to super for which you have not claimed a tax deduction.

If you’re considering contributing more to super, now is the time to take action.

For more information about superannuation or an aspect of your financial position, book a free consultation with Lisa by clicking here or the button below. 



General Advice Warning
The information provided in this blog is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this blog you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Your adviser can help you with this.

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