Take care with contributions

摘要

If you don't want to be hit with a big tax slug, you need to make sure you understand the limits to what you can put in to your fund, Daryl Dixon writes, especially after July 1 this year. The process of determining the optimal tax-deductible or concessional contributions to superannuation may appear to be a relatively simple task of calculating and achieving the resulting tax benefits. However, the introduction of the penalty tax provisions on excessive annual contributions has created a major obstacle when making both concessional and non-deductible non-concessional contributions to DIY and other funds. The overriding and essential objective is to avoid triggering the penalty tax provisions, which cut in when members exceed the prescribed annual contributions limits. This will become even more important from July 1, 2012, after the government reduces the annual concessional cap from $50,000 to $25,000 except for taxpayers over 50 with less than $500,000 inside super.