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Excess concessional contribution charge explained

The excess concessional contributions (ECC) charge is applied to the additional income tax liability arising due to excess concessional contributions included in your income tax return. The intent of the ECC charge is to acknowledge that the tax is collected later than normal income tax. The charge is payable for the year a person makes excess concessional contributions and applies from the 2013-14 income year onwards.

The ECC charge period is calculated from the start of the income year in which the excess concessional contributions were made and ends the day before the tax is due to be paid under your first income tax assessment for that year.

The formula for calculating the ECC charge uses a base interest rate for the day plus an uplift factor of 3%. The base interest rate is the monthly average yield of 90-day Bank Accepted Bills published by the Reserve Bank of Australia.

This compounding interest formula is applied against the base amount (the additional income tax liability) for each day of the ECC charge period.

The ECC charge rates are updated quarterly and listed in the table below.

Table 3: Excess concessional contribution charge rates
QuarterAnnual rateDaily rate
October - December 20164.76%0.013005464480874%
July – September 20165.01%0.013688524590164%
April – June 20165.28%0.014426229508197%
January – March 20165.22%0.014262295081967%
October – December 20155.14%0.014082191780822%
July – September 20155.15%0.014109589041096%
April – June 20155.36%0.014684931506849%
January – March 20155.75%0.015753424657534%
October – December 20145.63%0.015424657534247%
July – September 20145.69%0.015589041095890%
April – June 20145.63%0.015424657534247%
January – March 20145.59%0.015315068493151%
October – December 20135.60%0.015342465753425%
July – September 20135.82%0.015945205479452%

Non-concessional contributions cap

Non-concessional contributions include personal contributions for which you do not claim an income tax deduction.

If you have more than one fund, all non-concessional contributions made to all of your funds are added together and counted towards the non-concessional contributions cap.

Table 4: Non-concessional contributions cap
Income yearAmount of cap
2016–17$180,000
2015–16$180,000
2014–15$180,000
2013–14$150,000
2012–13$150,000
2011–12$150,000
2010–11$150,000
2009–10$150,000
2008–09$150,000
2007–08$150,000

The non-concessional cap for an income year is a multiple of the concessional contributions cap. The new indexed amount is generally available each February.

People aged under 65 years may be able to make non-concessional contributions of up to three times their non-concessional contributions cap for the year, over a three-year period. This is known as the ‘bring-forward’ option.

The bring-forward cap is three times the non-concessional contributions cap of the first year. If you brought forward your contributions in 2007–08, it would be 3 x $150,000 = $450,000.

Associated earnings rate (for excess non-concessional contributions)

Individuals have the option of electing to release non-concessional superannuation contributions made from 1 July 2013 which are in excess of the non-concessional contributions cap for 2013–14 and future income years.

An associated earnings amount is calculated to approximate the amount earned from the excess non-concessional contributions while they were held in the superannuation fund. This is included in the individual’s assessable income.

Table 5: Associated earnings rates
Income yearAnnual rateAssociated earnings rate / daily rate
2015–169.20%0.02513661%
2014–159.61%0.02632876%
2013–149.66%0.02646575%

Transitional arrangement for the non-concessional contributions cap between 10 May 2006 and 30 June 2007

Between 10 May 2006 and 30 June 2007, you could contribute up to $1 million of non-concessional contributions to your super fund. This limit was referred to as the transitional non-concessional contributions cap. If you had more than one fund, all non-concessional contributions made to all your funds were added together and counted towards the cap.

However, the following contributions were excluded from the $1 million transitional non-concessional contributions cap:

  • Contributions arising from personal injury payments
  • Up to $1 million of contributions derived from the disposal of certain small business assets – these contributions were subject to the Capital gains tax (CGT) cap

CGT cap amount

Under the CGT cap, you can during your lifetime exclude non-concessional super contributions from the non-concessional contributions cap up to the CGT cap amount. The CGT cap applies to all excluded CGT contributions, whether they were made between 10 May 2006 and 30 June 2007 or after 30 June 2007.

Table 6: CGT cap amount
Income yearAmount of cap
2016–17$1,415,000
2015–16$1,395,000
2014–15$1,355,000
2013–14$1,315,000
2012–13$1,255,000
2011–12$1,205,000
2010–11$1,155,000
2009–10$1.1 million
2008–09$1.045 million
2007–08$1 million

The CGT cap amount is indexed in line with Average Weekly Ordinary Time Earnings (AWOTE), in increments of $5,000 (rounded down). The new indexed amount is generally available each February.

Division 293 tax

From 1 July 2012, Division 293 tax will be applied to certain super contributions to reduce the concessional tax treatment of those contributions made for very high-income individuals.

High-income threshold

The high-income threshold is $300,000.

An individual's income is added to certain super contributions and compared to the high-income threshold. Division 293 tax is payable on the excess over the threshold, or on the super contributions, whichever is less. The rate of Division 293 tax is 15%.

Division 293 tax is not payable on excess concessional contributions that have been taxed under Division 292 (or refunded under section 292-467).

End of year interest

Where Division 293 tax relates to defined benefit interests, payment of the tax is deferred until a super benefit is paid from the interest. The ATO must keep a debt account for each defined benefit interest for which there is an amount of Division 293 tax that has been deferred.

End of year interest is calculated on the amount by which the deferred debt account is in debit at the end of the income year at the average 10-year Treasury bond rate for that income year.

Table 7: Div 293 tax – end of year interest
Income yearAverage 10 -year Treasury bond rate
2015–162.6139%
2014–152.9978%
2013–14N/A *

* End of year interest was not applied to deferred debt accounts for the 2013–14 income year.

Note: A temporary 2% levy applies for the 2014–15, 2015–16 and 2016–17 income years to individuals with a taxable income of more than $180,000 per year. The levy is payable at a rate of 2% of each dollar of a taxpayer’s taxable income over $180,000. This will cease to apply from 1 July 2017

 

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