Here is what TAPS (https://www.payroll.com.au/) has to say about it


Concessional caps:

A concessional contribution cap is a cap on the value of superannuation contributions that can be taxed at a concessional rate.

Concessional caps apply to employer contributions (comprising of the superannuation guarantee and salary sacrifice).

The concessional caps do not limit the amount of contributions that can be placed into the fund, they provide the point at which the superannuation contributions are taxed at a higher rate if contributions are in excess of the cap.


What are Concessional Contribution Caps?

Firstly Concessional Contribution Caps are not a payroll responsibility and should not be managed by payroll. This is part of an individual’s income tax liability and should only be managed by the employee themselves or a Financial Advisor.  Employees should always seek independent financial advice before a decision is made to salary sacrifice. Payroll should never give advice about this area.

As a general rule, any money that is paid into super is only taxed at 15% up to the Concessional Contribution Cap.

  • From 1 July 2017, the cap is $25,000 p.a.

What happens if the Concessional Contributions Cap is exceeded?

If an employee goes over their concessional cap, the excess will be included in the employee’s personal assessable income and taxed at their marginal tax rate. The ATO will calculate the tax payable and provide an assessment notice to the employee after they do their tax return. If the employee has a salary sacrifice arrangement in place they should be wary of the risk that they may exceed the cap.



What does this mean to us in payroll?

Not much, however the changes will impact the way a variety of caps are managed. Under the current rules, many employees like to blame payroll when they exceed their personal super caps. Due to the complexity of the new rules, it will now be impossible for payroll to be involved.  If employees ask you questions about any of these changes you should advise them to talk to their financial advisor or accountant.

If these changes don’t make any sense, rest assured they shouldn’t! You are a “pay-roller” not a financial advisor and let’s be happy with that.

Changes to super excess concessional contributions

There are caps on the amount an employee can contribute to their superannuation each financial year that is taxed at lower rates. If employees contribute more than these caps they may have to pay extra tax.

This article from the ATO explains what happens if any of your employees exceed their concessional contributions cap from 1 July 2013.

Employees are personally responsible for ensuring they don’t exceed the contributions cap. As payroll professionals we cannot give any financial advice to employees. This article is provided for your information as you are likely to get some questions over the next few months as super funds report the 2013/14 contributions to the ATO.



Superannuation Maximum Contribution Base and Concessional Contributions

We get quite a lot of questions on the helpline on how to apply the Maximum Contribution Base and the Concessional Contribution Cap. Here is a detailed description so you can gain a solid understanding of both of them.

What is the Maximum Contribution Base? NB: (1/7/2018 - 30/6/2019 is now $54,030)

The Maximum Contribution Base (MCB) is a limit on the amount of income on which superannuation guarantee contributions are required. This is based on the employees' Ordinary Time Earnings (OTE), however there is a limit to the super guarantee contributions required. In other words superannuation guarantee is only payable on income up to the Maximum Contribution Base. The company can pay in excess of this amount if they wish to.

From 1 July 2017, the MCB is $52,760 per quarter. (This is the annual equivalent of $211,040, however it is important to remember that each quarter stands alone).

The quarterly MCB is generated when the income is actually paid to employee. For instance, any income paid to the employee from July to September becomes the Maximum Contribution Base for that quarter, even though it doesn't have to be paid until 28 October.

If the employee has a contract with a total remuneration that goes above the MCB, as long as you meet your Superannuation Guarantee quarterly contribution required, the difference can be paid as taxable wages.

Here is an example of how it works;

Annual Base Salary

$ 250,000.00 

Max Cont Base

Base Salary

$ 250,000.00

$ 250,000.00

Plus 9.5% Super

$ 23,750.00

$ 20,048.80

Cash Super Adjustment

$ 3,701.20

Total

$273,750.00

$273,750.00

Monthly Salary

$ 20,833.33 

Qtr Max Contribution Base

$ 52,760.00

Quarterly breakdown for Maximum Contribution Base to be considered


Month 1

Month 2

Month 3

Gross Salary

$ 20,833.33 

$ 20,833.33

$ 20,833.33

Super Guarantee

$ 1,979.17

$ 1,979.17

$ 1,053.87

Super adjustment paid as GROSS

$ -

$ -

$ 925.30

Total

$ 22,812.50

$ 22,812.50

$ 22,812.50


What are Concessional Contribution Caps?

Firstly Concessional Contribution Caps are not a payroll responsibility and should not be managed by payroll. This is part of an individual’s income tax liability and should only be managed by the employee themselves or a Financial Advisor.  Employees should always seek independent financial advice before a decision is made to salary sacrifice. Payroll should never give advice about this area.

As a general rule, any money that is paid into super is only taxed at 15% up to the Concessional Contribution Cap.

  • From 1 July 2017, the cap is $25,000 p.a.

What happens if the Concessional Contributions Cap is exceeded?

If an employee goes over their concessional cap, the excess will be included in the employee’s personal assessable income and taxed at their marginal tax rate. The ATO will calculate the tax payable and provide an assessment notice to the employee after they do their tax return. If the employee has a salary sacrifice arrangement in place they should be wary of the risk that they may exceed the cap.

What is included in the Concessional Contribution Cap?

Concessional contributions include employer contributions such as:

  • compulsory Superannuation Guarantee contributions
     
  • any additional voluntary super contributions your employer may make
     
  • any fund costs paid by your employer on behalf of your super fund, such as administration fees and insurance premiums
     
  • salary sacrifice amounts

For the employee’s individual concessional cap, the contribution period is based on when the money was actually received by the fund. For instance, the June super contributions must be paid to the fund by 28th July. If paid on or after 1 July, that payment will represent the first part of the concessional cap for new financial year.

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