Non-Concessional Super Contributions, any advice on the rules?

[Pager]

I have been thinking of making a one off contribution to my SMSF but im unsure of the tax implications or if im allowed to do it without being penalised with extra tax, have read through the esuperfund site as that’s who I run my SMSF with and done searches on the internet but im finding it a bit confusing.

Currently with employer contributions and Salary Sacrifice I pay the full $25,000 that im allowed to each year but this contribution I want to make will be from the sale of Shares and on which I will have to pay Capital Gains Tax, my confusion with this is that I don’t want to have to pay tax twice, the CGT from the profit selling the shares and then another 15% (or more) when depositing the money in my Super, I read there is a non concessional way to contribute but there is a cap on this type of payment which I read is $120,000, now the 2 areas im finding confusion with are, is this cap a flat cap irrespective of you income ? as ive read a couple of sites that seem to suggest it depends on your income as to how much you can contribute and then if it is dependent on your income does it include any other Super contributions ?, for me the salary sacrifice and employer contribution meaning I could pay in $95,000 without paying contributions tax, assuming i was allowed to pay in the full $120,000.

Hope that makes sense, any advice appreciated.

 

[sydboy007]

I have been thinking of making a one off contribution to my SMSF but im unsure of the tax implications or if im allowed to do it without being penalised with extra tax, have read through the esuperfund site as that’s who I run my SMSF with and done searches on the internet but im finding it a bit confusing.

Currently with employer contributions and Salary Sacrifice I pay the full $25,000 that im allowed to each year but this contribution I want to make will be from the sale of Shares and on which I will have to pay Capital Gains Tax, my confusion with this is that I don’t want to have to pay tax twice, the CGT from the profit selling the shares and then another 15% (or more) when depositing the money in my Super, I read there is a non concessional way to contribute but there is a cap on this type of payment which I read is $120,000, now the 2 areas im finding confusion with are, is this cap a flat cap irrespective of you income ? as ive read a couple of sites that seem to suggest it depends on your income as to how much you can contribute and then if it is dependent on your income does it include any other Super contributions ?, for me the salary sacrifice and employer contribution meaning I could pay in $95,000 without paying contributions tax, assuming i was allowed to pay in the full $120,000.

Hope that makes sense, any advice appreciated.

Non concessional / undeducted contributions do not attract the 15% contribution tax.

Non concessional contributions are capped at $150K per year with a bring forward rul of 3 years / 450K as one payment.

AFAIK there is no capping based on income for non concessional contributions.

Best to speak to your accountant since you'll be depositing such a large sum

 

[sptrawler]

I have been thinking of making a one off contribution to my SMSF but im unsure of the tax implications or if im allowed to do it without being penalised with extra tax, have read through the esuperfund site as that’s who I run my SMSF with and done searches on the internet but im finding it a bit confusing.

Currently with employer contributions and Salary Sacrifice I pay the full $25,000 that im allowed to each year but this contribution I want to make will be from the sale of Shares and on which I will have to pay Capital Gains Tax, my confusion with this is that I don’t want to have to pay tax twice, the CGT from the profit selling the shares and then another 15% (or more) when depositing the money in my Super, I read there is a non concessional way to contribute but there is a cap on this type of payment which I read is $120,000, now the 2 areas im finding confusion with are, is this cap a flat cap irrespective of you income ? as ive read a couple of sites that seem to suggest it depends on your income as to how much you can contribute and then if it is dependent on your income does it include any other Super contributions ?, for me the salary sacrifice and employer contribution meaning I could pay in $95,000 without paying contributions tax, assuming i was allowed to pay in the full $120,000.

Hope that makes sense, any advice appreciated.

Here is a link to a very good explanation, have a read and then ask questions if you have any.

http://www.superguide.com.au/smsfs/smsf-off-market-share-transfers-may-be-banned-from-july-2013

 

[Pager]

sptrawler and sydboy007

Thanks

 

[Andrew Newman]

Hi Pager

sydboy007 is correct but understand the bring-forward provision is only for people under age 65 and the total contributions over the 3 years can't go over $450,000 - that is it doesn't have to be one payment.

I have provided links to the ATO website for your confirmation.

http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00106372.htm&page=6&H6 and http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00106372.htm&page=23#P609_42556

Once you contribute the funds to your SMSF, how were you looking at investing the funds?

Kind Regards

 

[dyna]

Non-concessional/post-tax superannuation contribution limits are to increase from 1st July 2021 to $110,000 p.a. or to 3 times that amount under the 3 year bring forward rule.
However, non concessional super contributions are "strengstens verboten" if your total superannuation balance already exceeds the $1.6 million cap (TBC). The new $1.7 million TBC cap applies from 1st July 2021,too,but your personal cap is applied from what is in your account on the 30 th June the previous year.So, the $1.6 mill cap still applies through to the end of next financial year, 30th June 2022.

 

[Dona Ferentes]

New changes from 1 July 2022​

Super changes, the Budget and 2021 versus 2022

Josh Frydenberg's third budget contained changes to superannuation and other rules but their effective date is expected to be 1 July 2022. Take care not to confuse them with changes due on 1 July 2021.

www.firstlinks.com.au

All measures outlined below, other than the proposed changes to legacy retirement products, are expected to commence from 1 July 2022, once they have received Royal Assent.


1. Repealing the work test for voluntary contributions


Individuals aged 67 to 74 (inclusive) will be able to make non-concessional (including under the bring-forward rule) or salary sacrifice contributions without meeting the work test, subject to existing contribution caps and existing total superannuation balance limits.


TIP: The waiver of the work test will not apply to personal deductible contributions, so individuals aged 67 – 74 wishing to claim a tax deduction for personal contributions will be required to meet the work test (or be eligible to apply the work test exemption).


Individuals aged 65 to 74 will also be able to use the bring forward provisions subject to the available caps and meeting the total super balance criteria. Currently, only those under age 65 on 1 July of a financial year can trigger the bring forward provision in that financial year. The measure that was originally announced in the 2019-20 Federal Budget to extend this age from 65 to 67 effective 1 July 2020 has not been legislated.

 

[dyna]

As noted above, the work test still applies for next fiscal year, from 1 st July 2021 to 30 th June 2022.
If say, your 67 th birthdate is inside that fiscal year, by submitting the new $27,500 concessional/pre-tax contribution BEFORE that date,you can avoid the work test [ 40 hrs in a 30 day period]
Here's a trick I've been using for years. Put your your full concessional in, at the start of July (If you're "self-employed" or whatever) but don't submit your tax claim form, for another 11 months, i.e. just before 30 th June at year's end. That leaves 15% of it ($4,125) generating a good return inside your fund, instead of sitting in the taxman's pocket.

 

[dyna]

Further to the work test conditions above, for folks aged 67 to 74.
If our 67 year old,in the example, wants to make a further concessional/pre-tax $27,500 voluntary super contribution,the following year, he will have to pass the work test to claim it as a tax deduction, as the work test is not being abolished for all types of personal contributions.It only applies for non-concessional/post-tax contributions and/or salary sacrifice contributions and provided your total superannuation balance ( TSB ) is not above the new cap ( TBC ) of $1.7 Mill on June 30 next year....Assuming all this becomes law ,of course.

 

[dyna]

You can also ,now contribute a concessional/pre-tax $27,500 (from 1st July 2021), and claim it as a tax deduction, up to 28 days after the end of the month you turn 75,provided you are "gainfully employed" (check the ATO's website for what you can get away with) for 40 hours in a 30 day period.