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Super earners must be super careful

Penny Pryor

If you earn over $300,000 – and congratulations if you do – you need to be aware of a new tax level on your superannuation. Brought in by the Labor government in the last budget, for the total amount of your superannuation over $300,000 you will be taxed at 30 per cent instead of the concessional 15 per cent that most people are taxed.

In the cross-hairs

At the time, the government estimated that would bring in an extra $946 million over the forward estimate period. It is expected to hit 128,000, or 1.2 per cent of people contributing to superannuation in this financial year.

As it’s normal practice to quote a salary with the assumption that superannuation is on top, even if you earn $295,000 (plus super) you can be caught up in the extra tax rate.

For example the 9 per cent superannuation guarantee on $295,000 is $26,550, however the maximum superannuation contribution base is $183,000. This means your employer is not required to pay more than 9 per cent of $183,000 into your super or $16,470. But even so, that amount will push you over $300,000, which means a superannuation amount of $11,470 will be taxed at 30 per cent instead of 15 per cent.

Cap alert

High income earners should also be aware of the superannuation contribution caps. These are $25,000 for pretty much everybody but, if you’re already getting $16,470 paid into your superannuation, you’ll hit that limit a lot quicker if you are also salary sacrificing.

And if your employer is being particularly generous and paying super on your total amount of your base salary – something they would occasionally do as part of a package – you’ll get their even faster.

If you’re not careful you could be paying 93 per cent on some portion of your superannuation - check out how that could happen here.

If you accidentally exceed the contribution cap by less than $10,000 you might be able to get a refund, although not many people have taken up this opportunity to date.

Either way, it’s probably timely to talk to your accountant or adviser to make sure you won’t be hit with any nasty penalties come July 1, 2013.

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