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Re: Superannuation Contribution Limit

Initiate

Views 1081

Replies 5

I have two questions;

1.  Are the $100,000 annual and $300,000 bring forward limits before or after deduction of the 15% AFE tax?

2.  If the initial contribution doesn't use up the full $300,000 bring forward limit, can an additional amount be contributed subsequently so long as it stays beneath the $300,000 limit?

Thanks,

Chris

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Megastar

Replies 2

Hi

 

100K is Tax Free as Personal Contributions 

25k is the cap including SG

Suppose you have salary of 100k amd SG 9.5 that is Super $9500.00

15500 you can claim as Taxable Deductions in Individual tax Returns 

and 15% tax on $15500 of $1472  and plus 9500 tax 15% $1425

5 REPLIES 5

Megastar

Replies 4

Hi

 

The 300k are Tax free Non Concessional Contributions after Tax and concessional Contribution are Tax Deductable 15%

 

The annual NCC cap was reduced to $100,000 for the 2018 income year and this cap continues
to apply for the 2020 income year.
For the 2020 income year, access to the NCC cap is subject to a member’s Total Superannuation
Balance (‘TSB’) being less than $1.6 million on 30 June 2019 (and there being no existing ‘bringforward’
arrangement for NCCs in effect from the 2018 or 2019 income years). A member’s NCC
cap is reduced to nil if their TSB was greater than or equal to $1.6 million on 30 June 2019. A
person’s TSB is broadly the net market value of a member’s total superannuation interests, as
determined under the formula in S.307-230 of the ITAA 1997.
Additionally, an individual’s total NCC cap under the ‘bring forward rule’ (if available) is reduced
from $300,000 (i.e., 3 years’ worth of NCCs) to $200,000 (i.e., 2 years’ worth of NCCs) or $100,000
(i.e., the annual cap) based on their TSB.
In particular, under S.292-85(3) of the ITAA 1997, a fund member can only access the maximum
bring forward cap amount of $300,000 in the 2020 income year, if all of the following requirements
are met:
(a) The individual is under 65 years of age at any time during the 2020 income year.
(b) The individual’s NCCs for the 2020 income year exceed the $100,000 NCC cap.
(c) The ‘bring forward rule’ was not triggered in any of the 2018 or 2019 income years.
(d) The individual’s TSB at the end of the 2019 income year was less than $1.4 million.
The following

 

If the ‘bring forward rule’ is triggered in the 2020 income year and the relevant bring forward cap
is not fully utilised in that year, the member is able to make further NCCs in the 2021 income year
(i.e., to the extent of the unused portion of the NCC cap), provided their TSB on 30 June 2020 is
less than $1.6 million. Naturally, this also applies to utilising any unused bring forward cap in the
2022 income year where the ‘bring forward rule’ operates over three income years, as there is
ongoing TSB testing each income year

Initiate

Replies 3

Hi RTAX,

Thanks for your response. Your answer to my quastion 2 is clear. Howver, I am unclear on your answer to my question1.  Please can you explain again.  Perhaps this example wil help.

I contribute $100,000.  The tax is $15,000.  The net is $85,000.  Can I put in another $17,647 less $2,647 15% tax = $15,000 so the total is $100,000? i.e. the limit is after tax is decducted.

Thanks,

Chris

Most helpful response

Megastar

Replies 2

Hi

 

100K is Tax Free as Personal Contributions 

25k is the cap including SG

Suppose you have salary of 100k amd SG 9.5 that is Super $9500.00

15500 you can claim as Taxable Deductions in Individual tax Returns 

and 15% tax on $15500 of $1472  and plus 9500 tax 15% $1425

Initiate

Replies 1

Hi RTAX,

Thanks again for your response (and patience).  I think I need to explain my question 1 more clearly.  It relates to transferring a UK pension into an SMSF/QROPS. To do this there is a deduction of 15% tax on the Applicable Fund Earnings.  What I am trying to ascertain is whether it is the UK pension value before or after deduction of the 15% AFE tax that has to be less than $100,000 ($300,000 with carry forward) - i.e. can I contribute $115,000 roughly on the basis that once the 15% tax has been deducted the actual amount that will go into the SMSF will be $100,000 or less?  I hope this explanation makes more sense.

Regards,

Chris

Megastar

Replies 0

Hi

 

My understanding is You QROPS Registered SMSF and you want tfr uk pension in smsf and the question are you citizen of uk or Australia and presently were are you working in Australia or UK and what eaxctly is your Pension Life Pension .

 

Australian tax payable on the transfer into the QROPS

Since the bulk of the money or assets transferred from your UK pension fund to the Australian superannuation fund is regarded as a non-concessional contribution, the fund will not have to pay tax because it received the transfer.

However, if the amount transferred has increased in value since you started your Australian tax residency (unless the transfer was within 6 months of your Australian tax residency - see below), there will be a taxable element as far as Australian tax is concerned, called the "applicable fund earnings" or AFE. If you think of it, if you had transferred the money into an Australian superannuation fund on the day of your arrival in Australia, any increase in the value of the fund would have been taxed at 15% since then (in Australia a superannuation fund in its accumulation phase pays 15% tax on its income).

Secondly, making the election affects the amount counted towards the contribution cap. The amount you elect as assessable income of the fund does not count towards the contribution cap. As an example, suppose your UK pension fund was worth $100,000 at the time you became tax resident in Australia. When you transfer it to your Australian superannuation fund it is worth $130,000. This means that the applicable fund earnings are $30,000. Then, provided you elect on form NAT 11724 for the fund to pay tax on this element (that is, $30,000 x 15%) for the purpose of the contribution cap, the actual contribution that year is regarded as $100,000 and not $130,000.