Questions & Answers
Answers to frequently asked questions about Self Managed Superannuation Funds (SMSF) and pension plans
What is total superannuation balance?
What is total superannuation balance?
Total superannuation balance is the total value of member’s super interests on a given date.
Total superannuation balance is the sum of the following:
| Accumulation interest (+) transfer balance account (or modified transfer balance account) (+) rollover in transit (–) structured settlement contributions |
What are the contribution rules?
What are the contribution rules?
Contribution rules (from 1 July 2007)
| Contribution type | Member age under 65 | Member age 65-69 | Member age 70-74 | Member age 75 + |
|---|---|---|---|---|
| Undeducted contributions |  | Must be gainfully employed at least on part-time basis 3 | Must be gainfully employed at least on part-time basis 3 |  |
| Eligible for co-contributions | | | Only if less than age 71 at end of financial year of contribution | |
| Deductible contributions | If less than age 18, must have some income from eligible employment1 or income from the carrying on of a business2, but this income must make up less than 10% of assessable income.5,6 | Must be gainfully employed at least on part-time basis3,6 | Must be gainfully employed at least on part-time basis3,6 | |
| Employer contributions | | | | |
| Superannuation guarantee | | | 4 | 4 |
| Mandated employer contributions (e.g. under award) | | | | |
| Salary sacrifice | | | | |
Please note that a rollover is not a contribution; rollovers can generally be undertaken at any age. Thus, while member contributions cannot be made after age 75, a CGT Exempt component (via the small business CGT Retirement Exemption) can be created and rolled over after age 75).
NOTES:
- Eligible employment means: the holding of any office or appointment; or the performance of any functions or duties; or the engaging in of any work; or the doing of any acts or things that results in the person being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (assuming that subsection 12 (11) of that Act had not been enacted).
- Business refers to any profession, trade, employment, vocation or calling, but does not include occupation as an employee.
- Gainfully employed at least on a part-time basis refers to someone who is gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in that financial year. This employment period must be satisfied before the date of the contribution.
- From 1 July 2013, employees over 70 will be entitled to super guarantee payments from their employer.
- This deduction cannot create a tax loss, i.e. the person must have derived income from employment or business (excluding passive income) and the deduction cannot exceed that income.
- Effective 1 July 2017, the 10% condition is removed for the 2017-2018 and future financial years.
What are concessional contributions caps?
What are concessional contributions caps?
| Year | Contribution cap for ages below 50 years | Contribution cap for ages 50 years and above |
|---|---|---|
| 2006-2007 | n/a | n/a |
| 2007-2008 | $50,000 | $100,000 |
| 2008-2009 | $50,000 | $100,000 |
| 2009-2010 | $25,000 | $50,000 |
| 2010-2011 | $25,000 | $50,000 |
| 2011-2012 | $25,000 | $50,000 |
| 2012-2013 | $25,000 | $25,000 ▲ |
| 2013-2014 | $25,000 | $25,000 |
| 2014-2015 | $30,000 ^ | $35,000 |
| 2015-2016 | $30,000# | $35,000 |
| 2016-2017 | $30,000* | $35,000 |
| 2017-2018 | $25,000 | $25,000 |
| 2018-2019 | $25,000** | $25,000** |
▲ If age 59 years or over on 30 June 2013, concessional contributions cap is $35,000.
^ If age 49 years or over on 30 June 2014, concessional cap is $35,000.
# If age 49 years or over on 30 June 2015, concessional cap is $35,000.
* If age 49 years or over on 30 June 2016, concessional cap is $35,000.
** From 1 July 2018 members can accrue any unused concessional contribution cap for a maximum of 5 years. However member can only make additional concessional contribution for any unused amount from 2019-2020 financial year, provided their total superannuation balance at the end of 30 June of the previous financial year is less than $500,000.
What are non-concessional contributions caps?
What are non-concessional contributions caps?
| Year | Contribution cap |
|---|---|
| 2006-2007 | $1,000,000 |
| 2007-2008 | $150,000 |
| 2008-2009 | $150,000 |
| 2009-2010 | $150,000 |
| 2010-2011 | $150,000 |
| 2011-2012 | $150,000 |
| 2012-2013 | $150,000 |
| 2013-2014 | $150,000 |
| 2014-2015 | $180,000 |
| 2015-2016 | $180,000 |
| 2016-2017 | $180,000 |
| 2017-2018 | $100,000# |
| 2018-2019 | $100,000# |
# Individual with a total superannuation balance of > $1.6 million as at 30 June of the previous financial year will no longer be eligible to make non-concessional contributions and government co-contributions. Refer to contributions table below if the individual triggers bring forward contribution from 1 July 2017.
What is bring forward contribution cap?
What is bring forward contribution cap?
From 1 July 2017, the bring forward contribution cap amount and period is dependent on member’s total superannuation balance at 30 June of the previous financial year.
| Total superannuation balance on 30 June of the previous financial year | Non-concessional contribution cap for the first year | Bring forward period |
|---|---|---|
| < $1.4M | $300,000 | 3 years* |
| $1.4M to below $1.5M | $200,000 | 2 years* |
| $1.5M to below $1.6M | $100,000 | None available but the member can contribute up to the general non-concessional cap |
| $1.6M or over | Nil | N/A |
* If member has triggered the bring forward rule and has not used up all the bring forward cap, member can contribute the remaining of the bring forward cap in subsequent years provided their total superannuation balance at 30 June of the previous financial year is below the general transfer balance cap.
What is the Superannuation Guarantee Maximum Contribution base per quarter?
What is the Superannuation Guarantee Maximum Contribution base per quarter?
| Year | Contribution cap per quarter |
|---|---|
| 2006-2007 | $35,240 |
| 2007-2008 | $36,470 |
| 2008-2009 | $38,180 |
| 2009-2010 | $40,170 |
| 2010-2011 | $42,220 |
| 2011-2012 | $43,820 |
| 2012-2013 | $45,750 |
| 2013-2014 | $48,040 |
| 2014-2015 | $49,430 |
| 2015-2016 | $50,810 |
| 2016-2017 | $51,620 |
| 2017-2018 | $52,760 |
| 2018-2019 | $54,030 |
What is transfer balance cap?
What is transfer balance cap?
From 1 July 2017, transfer balance cap applies as the maximum amount each member can transfer into retirement phase. Individual’s transfer balance cap is linked to general transfer balance cap.
| Year | General Transfer Balance Cap |
|---|---|
| 2018-2019 | $1,600,000* |
| 2017-2018 | $1,600,000* |
*Member’s transfer balance cap is equal to the general transfer balance cap.
What is the preservation age?
What is the preservation age?
| Date of birth | Preservation age |
|---|---|
| Before 1 July 1960 | 55 |
| 1 July 1960 - 30 June 1961 | 56 |
| 1 July 1961 - 30 June 1962 | 57 |
| 1 July 1962 - 30 June 1963 | 58 |
| 1 July 1963 - 30 June 1964 | 59 |
| From 1 July 1964 | 60 |
What is ‘basic conditions of release’?
What is ‘basic conditions of release’?
Retirement
- Preservation age to age 60 – must be permanently retired
- Age 60-64 – ceased employment after attaining age 60
Attaining age 65
Other
- Terminal medical condition
- Permanent incapacity
- Temporary incapacity
- Death
- Compassionate grounds
- Severe financial hardship
- Temporary resident departing Australia permanently
Conditions of release (other than Transition to Retirement Income Streams (TRIS))
| Preservation age | Condition of release | Benefits |
|---|---|---|
| 55 to 60 years | + Permanently retired | = Benefits can be accessed |
| 60 to 65 years | + Permanently retired or not | = Benefits can be accessed |
| Over 65 years | No other condition or restriction to comply |
What is minimum annual pension?
What is minimum annual pension?
| Age group | 2007-2008 | 2008-2009 2009-2010 2010-2011 | 2011-2012 2012-2013 | 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 |
|---|---|---|---|---|
| Under 65 | 4% | 4% (2% *) | 4% (3% **) | 4% |
| 65 - 74 | 5% | 5% (2.5% *) | 5% (3.75% **) | 5% |
| 75 - 79 | 6% | 6% (3% *) | 6% (4.5% **) | 6% |
| 80 - 84 | 7% | 7% (3.5% *) | 7% (5.25% **) | 7% |
| 85 - 89 | 9% | 9% (4.5% *) | 9% (6.75% **) | 9% |
| 90 - 94 | 11% | 11% (5.5% *) | 11% (8.25% **) | 11% |
| 95+ | 14% | 14% (7% *) | 14% (10.5% **) | 14% |
NOTES:
No maximum limit applies for account-based pensions (other than balance of account), 10% max limit applies to Transition to Retirement Pensions.
* For 2008/09, 2009/10 and 2010/11 financial years the minimum limits has been reduced by 50%.
** For 2011/12 and 2012/13 financial years the minimum limit has been reduced by 25%.
What tax is payable on pension payments from taxed fund?
What tax is payable on pension payments from taxed fund?
| Age group | Tax payable |
|---|---|
| 60 and over | Not assessable, not exempt income* |
| Below preservation age | - Taxed at marginal rates with no tax offset - Tax offset of 15% is available if a disability super benefit |
| Over preservation age and under 60 | Taxed at marginal rates with 15% tax offset |
| Over 60 | All benefits tax-free |
IMPORTANT NOTE:
Superannuation benefit payment from untaxed funds (i.e.: GESB) in pension and/or lump sum form are subject to different tax rates and may NOT be completely tax-free to individuals over age 60.
* From 1 July 2017, if members are receiving capped defined benefit income streams (including lifetime pensions/ annuities, life expectancy pensions/ annuities existing prior to 1 July 2017 and market-linked pensions/annuities existing prior to 1 July 2017) and the annual pension payment is more than the defined benefit income cap, 50% of the excess amount is taxed at members’ marginal rate.
| Year | Defined benefit income cap |
|---|---|
| 2017-2018 | $100,000 |
| 2018-2019 | $100,000 |
What are low-rate cap amounts for SMSF lump sum withdrawals?
What are low-rate cap amounts for SMSF lump sum withdrawals?
| Year | Amount |
|---|---|
| 2007-2008 | $140,000 |
| 2008-2009 | $145,000 |
| 2009-2010 | $150,000 |
| 2010-2011 | $160,000 |
| 2011-2012 | $165,000 |
| 2012-2013 | $175,000 |
| 2013-2014 | $180,000 |
| 2014-2015 | $185,000 |
| 2015-2016 | $195,000 |
| 2016-2017 | $195,000 |
| 2017-2018 | $200,000 |
| 2018-2019 | $205,000 |
What are tax rates on lump sum superannuation benefit payments from taxed funds?
What are tax rates on lump sum superannuation benefit payments from taxed funds?
| Age of taxpayer at date of payment | (1) Tax-free component | (2) Taxable component (Element taxed in the fund) |
|---|---|---|
| Below preservation age | 0% | 20% (excluding Medicare Levy) |
| Preservation age - 59 - up to low-rate cap - amount over low-rate cap | 0% | 0% 15% (excluding Medicare Levy) |
| 60 and over | 0% | 0% |
(1) Tax Free Component includes total of Undeducted Contributions, Pre-July 1983 Component, CGT Exempt Component, Concessional Component and Post-June 1994 Invalidity Component crystallised as at 1 July 2007 plus subsequent non-concessional contributions.
(2) Taxed component equates to the value of the superannuation interest less the Tax-Free Component. The total entitlement of an individual in a SMSF is treated as one interest (excluding the balance attributable to an income stream that has begun to be paid from the SMSF).
IMPORTANT NOTE:
Superannuation benefit payment from untaxed funds (i.e.: GESB) in pension and/or lump sum form are subject to different tax rates and may NOT be completely tax-free to individuals over age 60.
What are the resident marginal tax rates?
What are the resident marginal tax rates?
| Income 2006-2007 | Tax on this income |
|---|---|
| $0 - $6,000 | Nil |
| $6,001 - $25,000 | 15c for each $1 over $6,000 |
| $25,001 - $75,000 | $2,850 plus 30c for each $1 over $25,000 |
| $75,001 - $150,000 | $17,850 plus 40c for each $1 over $75,000 |
| $150,001 and over | $47,850 plus 45c for each $1 over $150,000 |
| Income 2007-2008 | Tax on this income |
|---|---|
| $0 - $6,000 | Nil |
| $6,001 - $30,000 | 15c for each $1 over $6,000 |
| $30,001 - $75,000 | $3,600 plus 30c for each $1 over $30,000 |
| $75,001 - $150,000 | $17,100 plus 40c for each $1 over $75,000 |
| $150,001 and over | $47,100 plus 45c for each $1 over $150,000 |
| Income 2008-2009 | Tax on this income |
|---|---|
| $0 - $6,000 | Nil |
| $6,001 - $34,000 | 15c for each $1 over $6,000 |
| $34,001 - $80,000 | $4,200 plus 30c for each $1 over $34,000 |
| $80,001 - $180,000 | $18,000 plus 40c for each $1 over $80,000 |
| $180,001 and over | $58,000 plus 45c for each $1 over $180,000 |
| Income 2009-2010 | Tax on this income |
|---|---|
| $0 - $6,000 | Nil |
| $6,001 - $35,000 | 15c for each $1 over $6,000 |
| $35,001 - $80,000 | $4,350 plus 30c for each $1 over $35,000 |
| $80,001 - $180,000 | $17,850 plus 38c for each $1 over $80,000 |
| $180,001 and over | $55,850 plus 45c for each $1 over $180,000 |
| Income 2010-2011 | Tax on this income |
|---|---|
| $0 - $6,000 | Nil |
| $6,001 - $37,000 | 15c for each $1 over $6,000 |
| $37,001 - $80,000 | $4,650 plus 30c for each $1 over $37,000 |
| $80,001 - $180,000 | $17,550 plus 37c for each $1 over $80,000 |
| $180,001 and over | $54,550 plus 45c for each $1 over $180,000 |
| Income 2011-2012 | Tax on this income |
|---|---|
| $0 - $6,000 | Nil |
| $6,001 - $37,000 | 15c for each $1 over $6,000 |
| $37,001 - $80,000 | $4,650 plus 30c for each $1 over $37,000 |
| $80,001 - $180,000 | $17,550 plus 37c for each $1 over $80,000 |
| $180,001 and over | $54,550 plus 45c for each $1 over $180,000 |
The above rates do not include the flood levy.
| Income 2012-2013 | Tax on this income |
|---|---|
| $0 - $18,200 | Nil |
| $18,201 - $37,000 | 19c for each $1 over $18,200 |
| $37,001 - $80,000 | $3,572 plus 32.5c for each $1 over $37,000 |
| $80,001 - $180,000 | $17,547 plus 37c for each $1 over $80,000 |
| $180,001 and over | $54,547 plus 45c for each $1 over $180,000 |
| Income 2013-2014 | Tax on this income |
|---|---|
| $0 - $18,200 | Nil |
| $18,201 - $37,000 | 19c for each $1 over $18,200 |
| $37,001 - $80,000 | $3,572 plus 32.5c for each $1 over $37,000 |
| $80,001 - $180,000 | $17,547 plus 37c for each $1 over $80,000 |
| $180,001 and over | $54,547 plus 45c for each $1 over $180,000 |
The above rates do not include the Medical levy of 1.5%.
| Income 2014-2015 | Tax on this income |
|---|---|
| $0 - $18,200 | Nil |
| $18,201 - $37,000 | 19c for each $1 over $18,200 |
| $37,001 - $80,000 | $3,572 plus 32.5c for each $1 over $37,000 |
| $80,001 - $180,000 | $17,547 plus 37c for each $1 over $80,000 |
| $180,001 and over | $54,547 plus 47c** for each $1 over $180,000 |
** Including the Temporary Budget Repair Levy. The above rates do not include the Medical levy of 2%.
| Income 2015-2016 | Tax on this income |
|---|---|
| $0 - $18,200 | Nil |
| $18,201 - $37,000 | 19c for each $1 over $18,200 |
| $37,001 - $80,000 | $3,572 plus 32.5c for each $1 over $37,000 |
| $80,001 - $180,000 | $17,547 plus 37c for each $1 over $80,000 |
| $180,001 and over | $54,547 plus 47c** for each $1 over $180,000 |
**Including the Temporary Budget Repair Levy. The above rates do not include the Medical levy of 2%.
| Income 2016-2017 | Tax on this income |
|---|---|
| $0 - $18,200 | Nil |
| $18,201 - $37,000 | 19c for each $1 over $18,200 |
| $37,001 - $87,000 | $3,572 plus 32.5c for each $1 over $37,000 |
| $87,001 - $180,000 | $19,822 plus 37c for each $1 over $87,000 |
| $180,001 and over | $54,232 plus 47c** for each $1 over $180,000 |
**Including the Temporary Budget Repair Levy.
The 2% Temporary Budget Repair Levy will expire at the end of the 2017 income year, returning the effective top marginal tax rate to 45%.
The above rates do not include the medical levy of 2%.
| Income 2017-2018 | Tax on this income |
|---|---|
| 0 – $18,200 | Nil |
| $18,201 – $37,000 | 19c for each $1 over $18,200 |
| $37,001 – $87,000 | $3,572 plus 32.5c for each $1 over $37,000 |
| $87,001 – $180,000 | $19,822 plus 37c for each $1 over $87,000 |
| $180,001 and over | $54,232 plus 45c for each $1 over $180,000 |
The above rates do not include the Medicare levy of 2%.
The temporary budget repair levy ceased applying from 1 July 2017.
| Income 2018-2019 | Tax on this income |
|---|---|
| 0 – $18,200 | Nil |
| $18,201 – $37,000 | 19c for each $1 over $18,200 |
| $37,001 – $90,000 | $3,572 plus 32.5c for each $1 over $37,000 |
| $90,001 – $180,000 | $20,797 plus 37c for each $1 over $90,000 |
| $180,001 and over | $54,097 plus 45c for each $1 over $180,000 |
The above rates do not include the Medicare levy of 2%.