SMSF Contributions Tax Increase

From 1 July 2012, contributions tax on concessional contributions increased from 15% to 30% for individuals who earn at least $300,000 in income. The definition of income is broad and includes taxable income, concessional superannuation contributions (both superannuation guarantee charge contributions and salary sacrifice contributions), adjusted fringe benefits, total net investment losses, some foreign income, tax-free pensions and benefits less child support.

Where the $300,000 limit has been breached because of the level of concessional contributions, the 30% contribution tax rate will only be applied to the excess contribution amount. On this basis, an individual with $280,000 in taxable income who has made a $25,000 concessional contribution would pay the 30% contribution tax on $5,000.

So far, no indication has been given as to the manner in which this measure is to be administered.

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