Superannuation

Complying Superannuation Funds

Income received, including capital gains and employer contributions and the deductible portion of self employed contributions are taxed at the rate of 15%. Funds are entitled to a refund of imputation credits that exceed the tax payable.

Income tax is not payable on income and capital gains where pensions are paid to the members. A Fund is entitled to a one-third discount on the disposal of assets that are held for at least 12 months.

Deductible Superannuation Contribution Limits

For the 2009/10 year, the maximum concessional superannuation contributions that can be claimed by an employer or a substantially self employed person is as follows:

  • Below 50 years of age at 30 June: $25,000 (indexed)
    Both employers and substantially self employed persons are entitled to claim a full tax deduction for the entire contributions made.
  • Age 50 and over at 30 June: $50,000 (unindexed)
    This is a transitional measure that applies up to the 2011/12 year, upon which the limit will reduce to the standard $25,000 indexed amount.

Note that contributions above these limits can still be claimed as a full deduction, but will be taxed at an overall effective rate of 46.5%.

Undeducted Superannuation Contribution Limits

For the 2009/10 year, the maximum after-tax contributions that can be made by an individual to a superannuation fund is limited to $150,000 per annum. This amount is fixed at six times the deductible contributions limit of $25,000 and will therefore increase as the $25,000 limit rises with indexation.

Where an individual is under the age of 65 at any time during the income year, there is a 3 year averaging rule whereby the person will be able to utilise the $150,000 cap for the current year and for the next two income years. This means that the person can in effect contribute a maximum of $450,000 as an undeducted contribution during the income year and the subsequent two income years. The $450,000 limit is automatically triggered in an income year where the taxpayer makes an after-tax contribution in excess of $150,000.

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