|Consider Mavis’ case
Mavis is a 56 year old employee of BHP Billiton and has been salary sacrificing to superannuation for the last few years to build her retirement nest egg. Mavis is concerned that due to the changes in superannuation contribution limits that she may need to revise the amount that she salary sacrifices into superannuation.
Mavis currently earns $253,000 gross earnings per year as an office manager, her superannuation guarantee that is paid by her employer is 9.5% up until the maximum superannuation contribution base which comes to $20,049.
The new concessional contribution cap for 2018 is $25,000 which means Mavis has the ability to salary sacrifice up to this amount. As a result Mavis can salary sacrifice an additional $4,951 to be within the concessional superannuation contribution limit.
Mavis will need to consider Division 293 taxation consequences as her income (including reportable super) exceeds $250,000. Division 293 tax of 15% applies to concessional contributions when the $250,000 threshold is exceeded. As Mavis is $3,000 over the threshold she will pay an extra 15% tax on these superannuation contributions, equating to $450.