Case Study – Over 50’s Concessional Cap Reduction

Case StudyFrom 1 July 2012, all taxpayers aged 50 and over will have their concessional contributions cap reduced to bring it in line with all taxpayers.


Blake (aged 54) earns a salary of $100,000 per year. As he is nearing retirement, for the previous two years (2010/2011and 2011/2012) Blake has sacrificed $20,000 of his salary into superannuation, with his employer agreeing to still calculate its 9% SG contribution on the $100,000.


As he is 50 or over, Blake is now subject to the reduced $25,000 concessional cap. Unless he urgently reviews his salary sacrifice arrangement with his employer, his $29,000 worth of contributions will lead to him paying at least 31.5% excess contributions tax on the $4,000 which exceeds the cap (excess tax due $1,260 in total).


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