Member voluntary contributions are non-concessional contributions, paid out of your after-tax salary and are therefore not taxed when deposited into your super account nor taxed if you withdraw your super benefit as cash when you retire.
Making voluntary contributions can really boost your super on retirement. There are many ways in which you can make voluntary contributions including:
- Lump sum contributions each year;
- Payroll deductions;
- Regular monthly conributions - similar to a savings plan; and
- Anytime that best suits you.
It is important to remember the amount of member voluntary contributions you make in a financial year without being subject to additional tax will now be capped, subject to the ‘bring forward’ rule explained below. The following table outlines what cap applies to you:
|
Age
|
Member Voluntary Cap
|
Bring forward option
|
|
Up to age 65 years
|
$150,000
|
$450,000 in any 3 year period
|
|
65 to 74
|
$150,000 subject to meeting the work test
|
N/A
|
|
75 years or over
|
$0
|
N/A
|
Contributions that exceed these limits will be taxed at a rate of 46.5%.
Bring Forward Rule
If you are under age 65 in a particular financial year you will be able to ‘bring forward’ future entitlements to two years worth of non-concessional contributions. This means, for example, that a person under age 65 would be able to contribute voluntary after-tax contributions totaling $450,000 in the 2008/2009 financial year without exceeding their voluntary after-tax contribution cap. Though once this limit is reached you could not contribute again until the three-year period has ended.
If you are 65 years or over, you will not be able to 'bring forward' your entitlements to make non-concessional contributions. Accordingly, if you are aged 65 to 74 you will have a non-concessional contributions cap of $150,000 for the 2007/2008 financial year (indexed), provided you meet the 'work test' for each year a contribution is made. This test requires that you work 40 hours in a continuous 30-day period during the financial year.
If you are aged 75 years or over, you are not eligible to make voluntary contributions to your superannuation account unless the contribution is made within 28 days of turning 75.