A non-concessional contribution is an after tax contribution made to superannuation. There is no tax payable when the contribution is made to your superannuation fund.
Advantages of making a non-concessional contribution:
- Making a non-concessional contribution to superannuation helps to maximise your retirement savings in a tax-effective environment.
- Earnings (capital gains and income) on your accumulated superannuation balance will be taxed at a maximum rate of 15%.
- There is no tax applied to a non-concessional contributions made to superannuation.
- Non-concessional contributions are added to the tax-free component of your superannuation account. No tax is payable on the tax-free component upon withdrawal from superannuation, or if distributed to non-tax dependent beneficiaries upon death.
Limitations of making a non-concessional contribution:
- Exceeding the contribution caps may attract extra tax of up to 45% plus Medicare levy.
- By making additional contributions, you reduce your available cash and you will only be able to access your contributions if you have met a condition of release.
- You will not be eligible to make a non-concessional contribution if you have $1.7 million or more in total superannuation benefits on 30 June each year.
- Non-concessional contributions are limited to $110,000 per person, per annum. If you are under the age of 67 at any point in the financial year of contribution, you can bring forward the next two years of contributions and make a $330,000 contribution.
- If you are 67 years or over, you will be required to meet a work test to contribute to superannuation. This requires you to work 40 hours in a 30 day period at some point in the financial year you are wishing to contribute.