What does the new superannuation cap mean for you?

Earlier this year, we broke down some of the superannuation changes that were introduced on 1 July, to help you be informed about your super choices.

We’ve received some questions about how the new $25,000 concessional contribution cap will interact with  the super guarantee.

First, it’s important to understand that the super guarantee is payable for quarterly earnings of up to $52,760 (annualised to $211,040). The ATO website has more information on the Maximum Super Contribution Base (MSCB).

The super guarantee is payable at a rate of 9.5%.In this scenario, the superannuation guarantee is $20,048.80.

This means that while you, as an employee, can provide contributions above the $25,000 cap, the contributions over $20,048.80 will be treated as ‘reportable employer superannuation contributions’, which may have an effect on your Adjusted Taxable Income. Essentially, your additional contributions will be seen as a salary sacrifice. See the ATO website for more information.

With Bookssorted payroll management, we act as your employer, ensuring 9.5 per cent of your earnings gets transferred to your superannuation account. Once your contributions reach the quarterly MSCB, we will cease superannuation guarantee contributions, unless you have requested additional payments in the form of salary sacrifice and have sought financial advice.

Additionally, an employee may be subject to an additional 15 per cent tax (Division 293), where the total of their taxable income plus their concessional superannuation contributions are in excess of the $250,000. The lower amount of either the concessional super contributions or the excess over $250,000 will be subject to 15% tax, payable by the trustee of the superannuation fund. See the ATO website for more information.

To find out more about the best option for you and your individual circumstance, please see your financial planner or tax adviser.

To change your super arrangements, email our payroll service team at contact@bookssorted.com.au or call 02 6161 8580.