Taking the time to understand the changes to super rates and thresholds will be time well spent, according to Oncore CFO Grant Gee.
February 10, 2014 (Newswire) - As of 1 July 2013, the concessional contributions caps for over-60s have increased to $5,000, while the concessional cap for everyone else remains at $25,000. There are also other changes from the ATO affecting superannuation rates and thresholds for the 2013/2014 year.
Mr Gee says with the reductions in the concessional contributions over recent years, there is a risk that people will exceed the new caps.
"If you're considering making concessional contribution, it is important that you are aware of the size of your concessional contributions cap, the amount of Superannuation Guarantee your employer is contributing, the timing of all contributions and that you are submitting your contributions in the right way, at the right time."
Superannuation contributions are either concessional (before-tax) or non-concessional (after-tax) both types are subject to a contributions cap, limiting the contributions you can make in any one year.
Concessional contributions (before-tax contributions) include compulsory Super Guarantee payments from your employer, additional employer contributions and any salary sacrificed contributions deducted from your before-tax salary.
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If you're self-employed, you are able to make concessional contributions and then claim them as a tax deduction in your individual tax return.
Non-concessional contributions (previously known as undeducted contributions) are after-tax contributions including spouse contributions and contributions made under the Super Co-contribution Scheme.
New rules mean penalties imposed for exceeding contribution caps may not be as damaging as previous years, but only if you're a first-time offender.
"If you exceed your concessional cap this year, new legislation means the federal government will allow you to withdraw any excess concessional contributions made to your super fund. However if you have a history of exceeding your contributions cap, you can expect higher penalties," says Mr Gee.
The key change for employers was the rise in the Super Guarantee (the compulsory super payment you make on behalf of your employees), increasing from 1 July by 0.25% to 9.25%. With mature aged workers (aged 70 or over), employers will also need to start making contributions on their behalf.
Oncore is a global outsourcing company and umbrella company specializing in contractor management system and contractor payroll services for corporate, recruiters and professional contractors. With key markets in Australia, the UK and New Zealand, Oncore is constantly monitoring financial developments in all regions, in particular legislative changes and the career mobility services industry.