CALL US: (07) 3367 0999 | EMAIL US:

Super contribution caps: the basics

Making contributions to your superannuation fund is a great way to grow your nest egg, however, there are caps on the amount you can contribute every financial year to be taxed at lower rates. Once you go over these caps, you may be required to pay additional tax.

The cap and extra tax amount will vary depending on your age, the financial year the contributions relate to, and whether the contributions are concessional (before tax) or non-concessional (after tax).

Concessional contributions
Concessional contributions include compulsory employer contributions and salary sacrifice amounts. There is a cap on the amount you can make, and payments are taxed at 15 per cent.

Non-concessional contributions
These are after-tax income contributions and are not taxed in your super fund. However, like concessional contributions, caps also apply to non-concessional payments. From 1 July 2017, the cap was reduced from $180,000 to $100,000 per year. This will remain available to individuals aged between 65 and 74 years providing they meet the work test. The cap is indexed in line with the concessional contributions cap.

The non-concessional cap is also nil for a financial year if you have a total super balance greater than or equal to the general transfer balance cap ($1.6 million in 2017-18) at the end of 30 June of the previous financial year.

Exceeding your non-concessional contribution cap
When you exceed your non-concessional contribution cap, you need to lodge an income tax return for that year. The ATO generally issues a determination if the return is not lodged within 28 days of the due date. You can withdraw the excess non-concessional contributions (and any earnings – the earnings would then be included in your income tax assessment).

Business
advice

taxation
planning

compliance
services

News

  • Recent Posts

  • Categories

    • Understanding Fringe Benefits Tax (FBT) And What It Covers

    April 15, 2024

    For businesses in Australia, providing fringe benefits to employees can be a valuable way to attract and retain talent, as well as incentivise performance.

    However, employers need to understand their obligations regarding Fringe Benefits Tax (FBT). The Australian Taxation Office (ATO) administers FBT, a tax on certain non-cash benefits provided to employees in connection with their employment.

    Let’s explore the types of fringe benefits subject to FBT to help businesses navigate this complex area of taxation.

    1. Car Fringe Benefits

    One common type of fringe benefit is the provision of a car for the private use of employees. This includes company cars, cars leased by the employer, or even reimbursing employees for the costs of using their own cars for work-related travel.

    1. Housing Fringe Benefits

    Employers may provide housing or accommodation to employees as part of their employment package. This can include providing rent-free or discounted accommodation, paying for utilities or maintenance, or providing housing allowances.

    1. Expense Payment Fringe Benefits

    Expense payment fringe benefits arise when an employer reimburses or pays for expenses incurred by an employee, such as entertainment expenses, travel expenses, or professional association fees.

    1. Loan Fringe Benefits

    If an employer provides loans to employees at low or no interest rates, the difference between the interest rate charged and the official rate set by the ATO may be considered a fringe benefit and subject to FBT.

    1. Property Fringe Benefits

    Providing employees with property, such as goods or assets, can also result in fringe benefits. This can include items such as computers, phones, or other equipment provided for personal use.

    1. Living Away From Home Allowance (LAFHA)

    When employers provide allowances to employees who need to live away from their usual residence for work purposes, such as for temporary work assignments or relocations, these allowances may be subject to FBT.

    1. Entertainment Fringe Benefits

    Entertainment fringe benefits arise when employers provide entertainment or recreation to employees or their associates. This can include meals, tickets to events, holidays, or other leisure activities.

    1. Residual Fringe Benefits

    Residual fringe benefits encompass any employee benefits that do not fall into one of the categories outlined above. This can include many miscellaneous benefits, such as gym memberships, childcare assistance, or gift vouchers.

    Compliance With FBT Obligations

    Employers must understand their FBT obligations and ensure compliance with relevant legislation and regulations. This includes accurately identifying and valuing fringe benefits, keeping detailed records, lodging FBT returns on time, and paying any FBT liability by the due date.

    Fringe Benefits Tax (FBT) is an essential consideration for businesses that provide non-cash benefits to employees.

    By understanding the types of fringe benefits subject to FBT, employers can ensure compliance with tax obligations and avoid potential penalties or liabilities.

    Seeking professional advice from tax experts or consultants can also help businesses navigate the complexities of FBT and develop strategies to minimise tax exposure while maximising the value of employee benefits. Why not start a conversation with one of our trusted tax advisers today?