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Q&A 3 December 2018

Q: The tax office has written to me telling me I have breached my superannuation concessional contribution cap. What now?

A: The Australian Taxation Office says it is issuing a larger number of excess concessional contribution determinations for the 2017/18 tax year, following the reduction in the concessional contribution cap to $25,000 for all super fund members.

Concessional contributions include contributions received from an employer, salary sacrifice into super and personal contributions for which a deduction has been claimed.

Your employer can’t change compulsory super guarantee amounts or amounts paid under a contract or industrial agreement.

Excess contributions are included in your income tax return and taxed at your marginal rate. The ATO applies a 15 per cent offset when calculating the tax owing, in recognition of the contribution tax paid.

The ATO will also apply a charge to cover the delay in paying tax on this income.

You can choose to withdraw some of the excess contributions to pay the additional tax. Individuals have 60 days to elect to release the excess. If you don’t withdraw the excess amount, it will be taxed at 47 per cent.

Once made, the election cannot be revoked, so taxpayers should first ensure that their super fund has correctly reported their contributions to the ATO before making an election.

The ATO is also issuing determinations for excess non-concessional contributions and for people with defined benefit funds.

The ATO website has the following tips for keeping concessional super contributions below the cap:

  • Keep track of the amount of contributions you, your employer or others make on your behalf.
  • Contributions count towards the cap in the financial year they are received, so check when your employer actually pays them.