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Paying tax on superannuation contributions

The amount of tax an individual pays on their super contributions depends on whether the contributions were made before or after they paid income tax; they have exceeded the super contributions cap or they are a very high-income earner.

Before-tax super contributions
Concessional (before-tax) super contributions are taxed at 15 per cent. They include employer contributions; contributions that are allowed as an income tax deduction and notional taxed contributions if you are a member of a defined benefit fund.
After-tax super contributions
Non-concessional (after-tax) super contributions are not subject to tax. They include contributions you or your employer make from your after-tax income; contributions your spouse makes to your super fund and personal contributions that are not claimed as an income tax deduction.
Excess contributions tax
There are limits on the amount of concessional and non-concessional contributions an individual can make each year, and these vary depending on the person’s age. Those who contribute too much to their super may have to pay extra tax. If they exceed the concessional super contributions cap, the excess is included in their income tax return and taxed at their marginal tax rate. Individuals can choose to withdraw some of the excess contributions to pay the additional tax.
Those who exceed the non-concessional super contributions cap can choose to withdraw the excess contributions and any earnings. The earnings are then included in their income tax assessment and taxed at your marginal rate. When individuals do not withdraw the earnings, the excess is taxed at 47 per cent.
Division 293 tax for very high-income earners
Division 293 tax is an additional tax on super contributions if a person’s combined income and super contributions are more than $300,000 a year. Division 293 tax is 15 per cent of a person’s taxable concessional contributions above the $300,000 threshold. For those who  are a member of a defined benefit fund, Division 293 tax may be calculated on notional contributions which are not capped.

Posted on 30 October '16 by , under Super.

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What to consider when consolidating your super

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds' policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

  • Exit fees
  • Insurance policies
  • Investment options
  • Ongoing service fees
  • Performance of the funds

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready:

  • Your tax file number.
  • Proof of identity. This could include your driver's license, birth certificate or passport.
  • Your fund's superannuation product identification number (SPIN).
  • Your fund's unique superannuation identifier (USI).
  • Details of your previous fund.

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