ATO - Key superannuation thresholds for 2019/20
The ATO has released some of the key super thresholds for the 2019/20 financial year.
Transfer Balance Cap
This cap is $1,600,000 and is unchanged from the 2018/19 financial year. The transfer balance cap is the maximum amount of super capital which a taxpayer can transfer during their lifetime into retirement phase and thereby benefit from the earnings tax exempt relating to retirement phase.
Concessional Contributions Cap – Remains at $25,000
This cap is $25,000 and is unchanged from the 2018/19 financial year. This cap is an annual cap and limits the amount of concessional contributions which are taxed at 15% in the hands of the super fund. While this cap does not preclude concessional contributions being made in excess of $25,000 in a financial year, the excess amount of those contributions will be automatically included in the taxable income of the member and thereby taxed at marginal tax rates (with a 15% offset for the tax paid on the excess amount in the fund). Additionally, interest is on the excess amount.
The member is able to release the net value of the excess amount from the super system. To the extent the net amount is not released from the super system, the excess amount is treated as a non-concessional contribution.
Non-concessional Contributions Cap – Remains at $100,000
This cap is $100,000 and is unchanged from the 2018/19 financial year. This cap is fixed at being 4 times the value of the concessional contribution cap.
This cap is an annual cap and limits the amount of non-concessional contributions which are not subject to tax in the hands of the super fund. While this cap does not preclude non-concessional contributions being made in excess of $100,000 in a financial year, the excess amount of those contributions (unless repaid pursuant to an ATO issued release authority) will be liable to 47% tax in the hands of the super fund. If the excess amount is repaid, then the associated earnings on the repaid amount is included in the taxable income of the member and taxed at the member’s marginal tax rates (with a 15% tax offset for the tax paid on the calculated investment earnings derived by the fund on the excess amount).
CGT Non-concessional Contributions Cap – Increased to $1,515,000
This cap is a lifetime cap, the dollar value of which for the 2019/20 financial year has been set at $1,515,000 (previously the dollar value of the cap was $1,480,000). As a lifetime cap, the amount of contributions to which the cap applies made in previous financial years will reduce the dollar value of the currently available cap.
This cap applies to contributions which are sourced from or relate to the small business capital gains exemptions being the 15-year exemption or the retirement exemption. While payments in excess of the lifetime are not precluded from being paid, the excess amount will be treated as a non-concessional contribution which may give rise to an excess non-concessional contributions amount.
Low Rate Cap Amount – Increased to $210,000
This cap has been increased to $210,000 (previously the cap was $205,000). This cap limits the amount of tax which would otherwise have been paid on the taxable portion of superannuation lump sums received by a member. This cap only applies to lump sums which are paid on or after the member attains their preservation age and age 60.
This cap is a lifetime cap so superannuation lump sums received in previous financial years to which the cap applied reduce the dollar value of the cap which can be applied in the current financial year.
The cap only applies to the taxable portion of an eligible superannuation lump sum. Where the taxable portion consists of both taxed and untaxed elements, then the cap is first applied to the taxed element and only then applied to the untaxed element.