Concessional contributions cap for people 50+ cut by 50%
May 22nd, 2012
Members need to be alert to the budget announcement that the $50,000 concessional cap rate that currently applies to all individuals aged 50 and over will drop to $25,000 from 1 July this year. For the next two years – at least – there will be one flat $25,000 cap for all members.
If you are aged 50+ and have been salary sacrificing so that your combined employer (9% or more) and salary sacrifice contributions total between $25,000 and $50,000 this financial year, you will need to adjust your salary sacrifice arrangements by 1 July.
You will need to make sure that your combined employer and salary sacrifice contributions in the next financial year 2012-13 do not, in total, exceed $25,000. Heavy excess tax penalties apply if the total concessional contributions made by any member of any age exceed $25,000 in the next financial year (and each year after).
As a result of the announced delay, the Government has further deferred any indexing of the $25,000 cap until 2014-15 when it anticipates the general cap will increase to $30,000, with the higher cap for those aged 50+ commencing at $55,000.