Superannuation, better known as the small amount of funds that are put into an account to support financial needs for retirement, can be confusing for many, but for the every day person, they often don’t even know what a super fund is!

The super fund, the advertisement that is sold to you in many forms, radio, Tv, mail, should be one of the most simple things to understand, yet it isn’t. There are many super funds to choose from, regardless, the super fundis a separate and most of the time, un accessible account that has regular contributions made to it by both the employer and sometimes individual, to set them up for retirement age.

The SG (Superannuation Guarantee is at a rate of 9.5%. This is the minimum amount that employers are obliged to contribute to their employees complying super fund, or a retirement saving account.

Who doesn’t love being paid on time though?

The due dates for the Superannuation Guarantee payments are as follows:

Quarter Period Payment Due Date
1 1st July – 30th September 28th October
2 1st October – 31st December 28th January
3 1st January – 31st March 28th April
4 1st April –30th June 28th July

Clearly, the due date for super to be paid is the 28th of the following month, after each quarter. However, we all love our holidays, and no one wants to be working on their vacation. Super is much the same. So, if the due date falls on a weekend or a public holiday, payment can be made on the next working day.

Much like everyone else again, super can not be considered paid until it reaches the super fund account. If you loaned some money out to your friend over the weekend, and he said he had paid you back, I am sure you wouldn’t consider your debt paid in full until you visibly see that money in the bank account. Superannuation is not valid when the money is sent under any circumstances, but when it is received and accepted by the appointed super fund.

The only difference is when employers are using the Small Business Superannuation Cleaning House. This payment will be counted as paid when it is received by SBSCH by the quarterly due date, and successfully distributed to relevant superfunds afterwards.

TIME TO GET DOWN TO THE KNITTY GRITTY

For super reconciliation purposes, we need to know super contribution break downs:

  • Which contribution was made for which employee(s) and which period(s) were paid.
  • Precis clients: need to breakdown the monthly totals from the cruncher report before checking it with the client.

In order to assist with the dreaded tax everyone has to pay, contributions can be made!

1. SG liabilities must be paid by June 2019 quarter before the 30/06/2019. This will bring the tax deduction to FY2018 if it is paid on time. However, if it is paid after the 01/07/2019, It is still deductible, but it will be in FY2020.

EXTRA SUPER –everyone loves a bit of extra cash, so why not secure some for your retirement?

2. Extra Super? Why wouldn’t you! Extra super is any contribution made to the super account that is above the 9.5% Superannuation Guarantee that each employer is liable to pay. If there is any contribution made above the SG, it must be included in a PAYG summary.

3. From the 01/07/17, anyone can make tax deductible personal contribution, whereas this was previously only available to people that earn less than 10% of their income from their employment. However, a tax deduction for personal contributions is only allowable if the individual has given valid notice to the trustee of the super fund claiming a tax deduction for all or part of the contribution made, and acknowledging that the notice was provided to the trustee.

4. After tax contribution is considered the non-concessional contribution that is made into the super fund from your income after tax. These are then not taxed in the super fund.

How SUPER! The idea of super contributions is set in stone now, so how much can actually be contributed?

  1. Concessional (before tax) Cap

The concessional contributions are the funds that are fed into your super account that the contributor claimed a tax deduction for. These contributions include:

  • Compulsory employer contributions
  • Additional concessional contributions the employer makes
  • Salary sacrifice payments to the super fund
  • Contributions allowed as income tax deduction.

Once these funds are in the super account, they are taxed 15%. A concessional cap is

Financial Year Age Concessional Cap
2018/2019 Any Age $25,000
2017 Below 49 $30,000
49 or Older $35,000

Excess concessional contributions will be included as taxable income, taxed at the marginal tax rate plus an excess concessional contributions charge.

      2. Non-concessional (after tax) Cap

Non concessional contributions are normally made from an individuals personal bank account. This aims to save better for retirement.

Financial YearNon –concessional CapTax on amounts over cap
2018/2019 $100,000 47%
2017 $180,000 47% (plus 2% budget repair levy)

Excess non-concessional contributions will be included as taxable income, taxed at the marginal tax rate plus an excess concessional contributions charge.

So now you know the KNITTY GRITTY of Superannuation Contribution, why not start the thought process of End of Year Tax Planning and set yourself up for a great year ahead. You WON’T regret it.