Changes to the Superannuation Contribution Caps

The superannuation guarantee requires employers to contribute at least 9% of an employee’s “ordinary time earnings” per quarter to a maximum super contribution base of $42,220 per quarter. This is indexed. For the quarter starting 1 July the maximum super contribution base will be $43,820.
Contributions for the quarter ending 30 June 2011 must be made to the employee’s fund by 28 July to avoid a superannuation guarantee charge.

Concessional superannuation contributions (employer contributions meeting the superannuation guarantee, award or agreement obligations; employee salary sacrifice contributions and government co-contributions for low income employees) are taxed on entry to the fund. Concessional contributions are also capped and contributions in excess of the cap are taxed much more heavily.

In 2009 the government reduced the caps to $25,000 and $50,000 for employees who are 50 and over. The $25,000 cap for employees under 50 is indexed. However, the increase to the indexing factor, which is used, is not great enough to move the cap, which remains at $25,000 for contributions made from 1 July 2011 until 30 June 2012. The $50,000 cap for employees 50 and over is not indexed and remains at $50,000.

Reportable Employer Superannuation Contributions (RESC) comprise employer contributions which can be influenced by the employee (including the employee’s sacrifice contributions), but not employer contributions to meet the superannuation guarantee, or obligations under an award or enterprise agreement. RESCs made for the year ending 30 June 2011 must be included in the employee’s payment summary for 2010-2011.

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