The contribution cap is the limit up to which a member can contribute to self-managed super funds (SMSF) in a financial year. If the member’s contribution exceeds the contribution cap limit, it attracts additional tax liability.
Fund-capped Contribution Limits
This type of contribution limit is applicable only for SMSF contributions received by you prior to 1st July 2017. The funds received in SMSF funds over the fund-cap limit are required to be returned within 30 days. However, the contributions are not required to be returned if they are received after 1st July 2017.
The fund-capped limit depends upon the age of the member as follows:
- For members aged 65 or more but less than 75 years as on 1 July, the limit of contribution is equal to the non-concessional contribution cap for the financial year.
- For members aged 64 or less as on 1 July, the limit of contribution is three times of non-concessional contribution cap for the financial year.
These are contributions that are included in SMSF’s assessable income and taxed at the concessional rate of 15%. Such a tax is also called contribution tax. Examples of these contributions include employer contributions like super guarantee and salary sacrifice contribution and personal contribution made by members for claiming a tax deduction.
The annual cap limit is $25,000 for everyone irrespective of age from 1 July 2017.
For financial years falling between 2014 to 2017, the contribution limit is $30,000 per year and $35,000 for people aged 49 or above. From 2013-14 onwards, excess contributions are not taxed as per excess contribution tax; the same is included in member’s assessable income and taxed as per the marginal tax rate.
Members can make carry-forward contributions with effect from 1 July 2018, if their super annual fund balance is less than $500,000 and use the same for five years.
Non-concessional contributions are those which are not included in the SMSF’s assessable income, for example, the personal contribution made by a member on which income tax deduction was not claimed.
For financial years falling between 2014 to 2017, non-concessional contributions are capped at $180,000 annually for members aged 65 or over but under 75 years or $540,000 over three years for members less than 65 years of age.
From 1 July 2017, non-concessional contributions are capped at the reduced amount of $100,000 for members aged 65 or over but under 75 years. For members aged less than 65 years, there is an option of contributing up to $300,000 over three years based on their fund balance.
Bring-forward & contribution cap details can be understood from the below table for member below 65:
Carry Forward Available
Less than $1.4 million
$300,000 cap (over three years)
Greater than or equal to $1.4 million but less than $1.5 million
$200,000 cap (over two years)
Greater than or equal to $1.5 million but less than $1.6 million
$100,000 cap (no bring-forward period, general non-concessional contributions cap applies)
Greater than or equal to $1.6 million
If members’ contribution exceeds the limit a tax liability at the rate of 47% would be levied on the excess contribution which would be a personal liability of the member.