Monitor Contributions To Super Carefully

By Andrew Yee*

As the financial year draws to a close, people who usually top up their superannuation contributions at this time of the year must take care not to over-contribute.
The ATO is cracking down on people exceeding their contribution limits and, for those who do, the penalties can be severe.
Excess superannuation contributions that are made (intentionally or unintentionally) above the contributions cap are liable for tax rates that can be as high as 93 percent.
It is easy to fall foul of the new restrictions on contributions that have been introduced for this year.
While members of super funds may believe that they know how much has already been contributed on their behalf during the course of the financial year, there are a number of ways contributions could have been made that they have overlooked.
For example, people who received a Christmas bonus may be unaware that their employer paid the nine percent superannuation contribution levy on it.
Another common mistake that some make is to think that the cap only applies to contributions made above the nine percent superannuation guarantee paid by their employer.
But the age old problem concerning when year end contributions have been made now carries greater significance because if you get the timing wrong, you may be slugged for excess tax.
For example a contribution made this financial year on behalf of the previous year???s earnings, is taken into account for this year???s contribution caps.
With payments made in one year, but not banked until the next, the general rule is that a contribution is considered to have been made when the superannuation fund gains access to the funds, not when the arrangements for payments have been made.
People therefore need to be very careful and review and monitor all superannuation contributions made by them or on their behalf, and to ensure that contributions are correctly reported by their superannuation funds. ??

* Andrew Yee is a director with accountants and business and financial advisers HLB Mann Judd Sydney