To help prevent a person from inadvertently exceeding the non-concessional contributions cap, funds cannot accept member contributions (defined in SISR to include all contributions apart from employer contributions) that are greater than the member's fund-capped contribution limit.
Table 5: Fund-capped contribution limits for members
|Age at 1 July
||Fund-capped contribution limit
If the member is 65 years old or older but less than 75 on 1 July of the financial year
the non-concessional contributions cap for that income year.
If the member is 64 years old or less on 1 July of the income year
three times the non-concessional contributions cap for that income year.
In accordance with SISR subregulation 7.04(4)External Link, if a fund receives a single contribution in breach of the fund-capped contribution limit they must return the excess amount to the member within 30 days of becoming aware that the amount was received in a manner that is inconsistent with applicable contribution standards.
The fund-capped contribution limit applies per contribution and not to the person's total member contributions to the fund.
Fund capped contributions do not include a:
- contribution to which a valid and acknowledged notice under section 290-170External Link relates (notice of intention to deduct personal contributions)
- contribution that meets the requirements of paragraph 292-95(1)(d)External Link (structured settlements or orders for personal injuries)
- contribution that meets the requirements of subsection 292-100(9)External Link (contributions relating to some CGT small business concessions)
- payment made by the Commissioner of Taxation under section 65External Link of the Superannuation Guarantee (Administration) Act 1992 (SG shortfall component)
- payment made by the Commissioner of Taxation under section 61External Link or 61AExternal Link of the Small Superannuation Accounts Act 1995 (payments from SHA special account)
- government co-contribution made under the Superannuation (Government Co-contribution for Low Income Earners) Act 2003
- contribution that is a directed termination payment within the meaning of section 82-10FExternal Link of the Income Tax (Transitional Provisions) Act 1997.
Example: returning excess contributions
Rosalind is 72 years old and makes a non-concessional (personal) contribution of $200,000 in 2011-12 financial year.
Rosalind's fund checks her member details and works out that her fund-capped limit is $150,000. They return the excess part of the contribution of $50,000 to her within 30 days.
After the end of the income year Rosalind's fund reports non-concessional contributions of $150,000 for her.
End of example
The ATO view is that the 30-day requirement imposes an obligation for the timely return of a contribution, however the trustee remains obliged under SISR subregulation 7.04(4)External Link to return the amount even if more than 30 days elapsed since the fund trustee became aware of the obligation.
End of attention
For more information, refer to:
End of further information
- ATO Interpretative Decision ATO ID 2007/225External LinkSuperannuation contributions: acceptance of fund capped contributions by a self managed superannuation fund
- ATO Interpretative Decision ATO ID 2008/90External LinkSuperannuation contributions: return of fund capped contributions by self managed superannuation fund
- ATO Interpretative Decision ATO ID 2009/29External LinkSuperannuation contributions: return of contribution by self managed superannuation fund - after 30 day time limit.
Example: personal super deductions
Henry is 55 years old. He makes a personal contribution of $500,000 in the 2011-12 financial year.
At the same time he gives his fund a valid notice that he intends to claim $50,000 as a personal super deduction (which will mean that this amount essentially becomes a concessional contribution - assessable to the fund).
Henry's fund checks his member details and works out that his fund-capped limit is $450,000.
After deducting the amount covered by the notice, the fund-capped contribution amount is $450,000 (this is the amount that is treated in the fund as a non-concessional contribution).
The fund does not have to return any amount to Henry.
Henry's fund reports personal contributions of $500,000 for him for the financial year. This is matched up with the $50,000 personal super deduction claimed by Henry on his tax return.
This means that Henry will not receive an assessment for ECT for the financial year.
End of example
Example: when funds can return contributions
Nerissa is 60 years old. She makes two non-concessional contributions of $400,000 in 2008-09 financial year, totalling $800,000.
Individually neither of Nerissa's contributions is greater than her fund-capped contribution amount for the financial year (three times the first year's non-concessional contributions cap of $150,000, which means that Nerissa's fund-capped contribution limit is $450,000).
Therefore, her fund cannot return any part of the contributions to her, unless her fund is aware that the amount received is inconsistent with SISR subregulations 7.04(1), (2) or (3) (acceptance of contributions rules).
If the excess amount is not returned to Nerissa, her fund must report $800,000 as Nerissa's personal contributions for the year, in which case Nerissa will have excess non-concessional contributions and will receive an assessment for excess contributions tax.
End of example
Example: interaction of the contributions caps
Lara is 62 years old, approaching retirement and has received an amount of money from the sale of a property.
As Lara is over 50 years old, in 2008-09 financial year she has a concessional contributions cap amount of $100,000 and a non-concessional contributions cap amount of $150,000.
During the 2008-09 financial year, Lara is advised to make a concessional contribution of $100,000 and a maximum allowable non-concessional contribution of $150,000.
As she will still be under 65 years old, she is also advised to make an additional non-concessional contribution during the 2009-10 financial year of $450,000, triggering the bring-forward rule.
Due to a mistake in the calculation of her employer's contribution, Lara exceeds the concessional contributions cap in the 2008-09 income year by $1000 resulting in a total concessional contribution amount of $101,000 and she will receive an excess concessional contributions tax assessment.
As excess concessional contributions are treated as non-concessional contributions and the maximum non-concessional contribution of $150,000 had been made, Lara exceeded the non-concessional contributions cap by $1,000 resulting in a total non-concessional contribution amount of $151,000.
Exceeding the non-concessional contributions cap during the 2008-09 financial year triggered the bring-forward rule in that year, meaning that the maximum non-concessional contribution that could be made during the 2009-10 financial year was
$450,000 - $151,000 = $299,000
However, Lara made a $450,000 non-concessional contribution in the 2009-10 income year resulting in an excess of
$450,000 - $299,000 = $151,000
Therefore, Lara is issued with an excess non-concessional contributions tax assessment of
$151,000 x 46.5% = $70,215.00
End of example