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Edited version of your written advice

Authorisation Number: 1012725022135

Ruling

Subject: Concessional contributions cap

Question

If you open a second superannuation fund, will personal contributions made to this fund be counted towards a separate concessional contributions cap?

Answer

No.

This ruling applies for the following periods:

Year ending 30 June 2015.

The scheme commences on:

1 July 2014.

Relevant facts and circumstances

You are over 49 years of age as at 30 June 2014.

You are receiving an income from your employer who pays superannuation guarantee into your superannuation fund.

In addition you have a salary sacrifice arrangement with contributions being made into your superannuation fund.

You have a second source of income which is from investment properties you own.

You are intending to open a second superannuation fund and make contributions into this fund sourced from your investment income.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 291-20

Income Tax Assessment Act 1997 Subsection 291-20(1)

Income Tax Assessment Act 1997 Subsection 291-20(2)

Income Tax Assessment Act 1997 Section 291-25

Income Tax Assessment Act 1997 Subsection 291-25(2)

Income Tax Assessment Act 1997 Paragraph 291-25(2)(b)

Income Tax Assessment Act 1997 Paragraph 291-25(2)(c)

Income Tax (Transitional Provisions) Act 1997 Section 291-20.

Income Tax Assessment Regulations 1997 Schedule 4

Reasons for decision

Summary

If you have more than one fund, all concessional contributions made to all your funds are added together and counted towards the concessional contributions cap.

The concessional contribution cap of $35,000 applies to you in the 2014-15 financial year.

Detailed reasoning

Concessional contributions cap

Excess concessional contributions for a financial year are defined in subsection 291-20(1) of the Income Tax Assessment Act 1997 (ITAA 1997) as an amount of a person's concessional contributions for a year that exceed the person's concessional contributions cap for the year.

Concessional contributions are defined in section 291-25 of the ITAA 1997. Relevantly, subsection 295-25(1) of the ITAA 1997 provides that the amount of concessional contributions for a financial year is the sum of:

Therefore, if you have more than one fund, all concessional contributions made your funds are added together and counted towards the one cap.

Concessional contributions cap is defined in subsection 291-20(2) of the ITAA 1997. For the 2014-15 financial year, the cap is set at $30,000. For 2015-16 or a later financial year, the cap amount is indexed annually.

However, there are transitional rules for older Australians as outlined in section 291-20 of the Income Tax (Transitional Provisions) Act 1997 (ITTPA 1997). Subsection 291-20(1) of ITTPA 1997 states:

Despite section 291-20 of the Income Tax Assessment Act 1997, your concessional contributions cap is $35,000:

(a) for the 2013-14 financial year - if you are 59 years or over on 30 June 2013; or

(b) for the 2014-15 financial year or a later financial year - if you are 49 years or over on the last day of the previous financial year.

This amount is not indexed

On 30 June 2014, you were over 49 years of age. Therefore, the concessional contribution cap of $35,000 applies to you in the 2014-15 financial year regardless of how many superannuation funds you have an interest in.

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