div style="color: #505050; font-family: Verdana; font-size: 14px; line-height: 150%; text-align: left;">From 1 July 2012, the $25,000 p.a. concessional contribution cap has applied to all tax payers, regardless of age or account balance. Concessional contributions are before-tax contributions and include Superannuation Guarantee (SG) payments (made by your employer on your behalf), salary sacrifice contributions and contributions by the self-employed.

Those who were making contributions up to the previous cap for people aged 50 and over  ($50,000 p.a.­) must be aware of potential issues surrounding the timing of contributions that could see them unwittingly exceed the new contributions cap of $25,000 p.a.

Timing of Contributions

It is important to be aware that the ATO assesses employer and salary sacrifice contributions in the year that they are received by the super fund.

Therefore, if you have a salary sacrifice arrangement with your employer, you should be aware of the following:

• Your June 2012 contributions may have been received by your fund in July 2012 and will therefore be included in your 2012/2013 cap, and
• Employer contributions for June 2012 quarter may not have been paid to your super fund until July 2012 and will therefore also be included in your 2012/2013 cap (as your employer has until 28 July to make SG contributions for the quarter that ends on 30 June)

What are the consequences of exceeding concessional contributions cap?

Concessional contributions are ordinarily taxed at 15% in the super fund. Contributions that exceed the $25,000 cap are taxed a further 31.5%, bringing total tax up to the top marginal tax rate of 46.5%. This could create a significant tax liability for those who may exceed the cap and don’t take action to reduce contributions accordingly for the remainder of this financial year.