Excess non-concessional (after tax) superannuation contributions

There is a cap on the amount of non-concessional (after tax) contributions you can make to your SMSF each financial year without having to pay extra tax.

If you have contributed more than the cap and you need to decide what to do with your excess amounts.

How the excess non-concessional (after tax) superannuation contributions are calculated by ATO?

ATO will use the following formula to calculate the excess:

The excess = (Non-concessional contributions made + %Associated earnings amount) – Non-concessional contributions cap

What you need to do with the excess?

Option 1 – Release the excess from your SMSF

Tell ATO  if you would like the excess amount to be released from your SMSF.

ATO will ask your SMSF to release and send the excess amount to them. ATO will also

amend your related personal income tax assessment to include your associated earnings amount. You will pay tax only on your associated earnings at your marginal tax rate.

Option 2 – Release no amount in relation to the excess and be assessed for excess non-concessional contributions tax

Your excess non-concessional contributions will be taxed at 47% and ATO will send you an excess non-concessional contributions tax assessment.

ATO will issue your SMSF with a release authority to pay your excess non-concessional contributions tax liability and ask them to release and send the amount to ATO.

If you do not want to pay from your SMSF , you will need to pay the liability from your own sources.