I want to contribute extra money to my superannuation account and have heard that there are limits to how much I can contribute.

From 1 July 2007 a limit of $150,000 per year has be placed on non-concessional contributions which are post-tax amounts that you have not claimed a tax deduction for. This cap amount may be indexed annually but is unchanged for the 2009-10 income year. If you contribute more than the cap amount you will be taxed at the highest marginal rate plus Medicare (46.5%) on those excess contributions. There are transitional rules that apply to taxpayers who are nearing retirement.

I have been thinking about salary sacrificing money into my superannuation account? Is there a limit to how much I can sacrifice?

Amounts paid into superannuation by your employer to meet the Superannuation Guarantee obligations and amounts paid under a salary sacrifice arrangement are called concessional contributions. From 1 July 2007 total annual concessional contributions have been capped at an upper limit. The limit is $25,000 for the 2009-10 income year and for people from 50 to 74 years of age the concessional contributions are not limited to $50,000. The cap for people in that age group will remain fixed until 30 June 2012. If annual contributions exceed the applicable cap amount, the excess will be taxed at the highest marginal rate, plus Medicare.

I have heard that salary sacrificed superannuation contributions will now be included in my total reportable fringe benefits. What does this mean?

From 1 July 2009 contributions made to a superannuation funds under a salary sacrifice arrangement will be included in the reportable fringe benefit amount shown on your payment summary. Also included will be any superannuation contributions for which a tax deduction has been claimed. This means that any entitlement you have to any benefits from Centrelink or the Family Assistance Office that are subject to an income test will take into account those amounts. It will also contribute to the calculation of any Child Support payments and be used to determine your liablility to such things as the Medicare Levy Surcharge or repayments of HECS-HELP debts.

I am over 60 years of age and retired. Will my superannuation pension be tax free in future?

From 1 July 2007 people who have reached 60 will no longer pay tax on a superannuation income stream (pension) that is from a taxed fund. A taxed fund is one where contributions tax was paid on the contributions made by your employer into your super fund on your behalf. Contributions tax would also have been paid for contributions made under a salary sacrifice arrangement. Most funds are taxed funds. However, for taxpayers who belonged to an untaxed super fund, they will still have to pay tax on their superannuation income stream, irrespective of their age.

I pay extra contributions to my superannuation fund. Can I claim this on my tax return?

Employee taxpayers whose employer is required to contribute to superannuation are not eligible to claim a tax deduction. Instead the government may make a co-contribution to their fund. To be eligible for the co-contribution your assessable income (including reportable fringe benefits) should be no more than $60,342 for the 2009 income year. You must also be less than 71 years of age at the end of the income year. The government will contribute a maximum of $1 for each $1 that you contribute to superannuation with a cap of $1000 per year. Contributions made through salary sacrifice or by another person on your behalf will not be counted for the purposes of calculating the co-contribution. If you are self employed you may be able to claim a deduction for your contributions.

How do I apply for the government co-contribution?

You do not need to apply. If you are entitled to a co-contribution the payment will be made to your fund after you have lodged your tax return and your fund has reported your contributions to the government. When the payment has been made to your fund you will receive a letter from the Tax Office notifying you of the amount.

Why am I am being asked to tell my superannuation fund what my tax file number (TFN) is?

If you do not tell your super fund what your TFN is the fund will be required to pay additional tax on any contributions made by your employer (including salary sacrifice amounts). Without having your TFN recorded, your fund will not be able to accept any personal contributions that you make and the government co-contribution that you may be entitled to cannot be paid into your account.