Tax on the Contributions to my SMSF

Introduction

Contributions can be made into a SMSF form a number of sources, each contribution may result in a different tax position for the contributor or the SMSF. Contributions largely can be sourced from the Employer or the member, although there are other sources of contributions.

Tax on the contributions to my SMSF

Contributions to the SMSF that the contributor receives a tax deduction for will generally be taxable in the SMSF at 15% which means the individual receives a maximum 30% concession (45% the top marginal rate less 15%), for changes in rates see <see % tax rates table>. However the exception to this rule is where an individuals income is greater than $300,000,then in these circumstances the tax on the SMSF contributions will increase to 30%, which means the individual receives a lower concession of 15%, read more;

Contributions to the SMSF that the contributor does not receive a tax deduction will generally not be taxable in the SMSF unless they exceed the non concessional threshold at <see tax rates table>.

Where a TFN is not quoted in respect to a member then the top marginal rate, presently 46.5% tax is payable <click here for rate changes>.

The following is a quick reference guide:

Tax Deductible to the contributor and subject to <see % tax rates table> tax in the SMSF:

• Employer SGC contributions
• Employer originated SGC shortfall amounts
• Employer contributions under an award
• Employer salary sacrifice & above SGC contributions
• Personal superannuation contributions –concecessional/tax deductible
• Reduction in tax concession for high income earners

Not Tax Deductible to the contributor and not subject to tax in the SMSF:

• Personal superannuation contributions – nonconcessional/non tax deductible
• Spouse contributions – You can claim up to a $540 rebate for contributions
• Government co contributions
• Direct termination payments
• Small Business Sales Proceeds contributions

Taxable in the SMSF depending on whether the contributor was able to obtain a tax deduction.

• FHSA contributions

Reduction in tax concession for high income earners

From 1 July 2012, individuals with income greater than $300,000 will have the tax concession on their contributions reduced from 30% to 15% (excluding the Medicare levy). In other words, an individual on the top tax rate of 45 per
cent (excluding Medicare) currently gets a tax concession of 30 per cent for any superannuation contributions, as superannuation contributions only pay 15 per cent tax. The concession will reduce from 30 to 15 per cent and any
superannuation contributions for individuals with income greater than $300,000 will now be taxed at 30 per cent.

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The definition of ‘income’ for the purpose of this measure will include taxable income, concessional superannuation contributions, adjusted fringe benefits, total net investment loss, target foreign income, tax-free government pensions and benefits, less child support.

 If an individual’s income excluding their concessional contributions is less than the $300,000 threshold, but the inclusion of their concessional contributions pushes them over the threshold, the reduced tax concession will only apply to the part of the contributions that are in excess of the threshold.

For example, someone with income excluding their concessional contributions of $285,000, and concessional contributions of $20,000 (taking their total income to $305,000), would have the reduced tax concession only apply to $5000 of their contributions.

‘Concessional contributions’ for the purpose of this measure include all employer contributions (both superannuation guarantee and salary sacrifice contributions) and personal contributions for which a
deduction has been claimed.  For members of defined benefit funds (both funded and unfunded schemes), it will include all of their notional employer contributions.

The reduced tax concession will not apply to concessional contributions which exceed the concessional contributions cap and are therefore subject to ‘excess contributions tax’.  These contributions are effectively taxed at the top marginal tax rate and therefore do not receive
a tax concession.

<See policies release><see ATO>

Excess Contributions Tax – Non Tax Deductible (Non Concessional Cap)
If you exceed the maximum contribution amount click here, then you will need to pay additional tax called Excess Contributions Tax.

Here’s what the ATO has tyo say about excess contributions tax <ATO-Link>.